MONETARY CRISIS REPORT
CLIMAX OF FINANCIAL FRAUD
COMPREHENSIVE GUIDE

* Intro Monetary Fragments
* USTreasurys & The Abyss
* Central Banks & Gold
* Tungsten Scandal Gone Viral
* Crude Oil & Petro-Dollar Demise
* Eurasia Trade Zone Advent


HAT TRICK LETTER
Issue #105
Jim Willie CB, 
“the Golden Jackass”
16 December 2012

"In addition, due to the high economic financialization, more than half of the profits in the real economy come from the returns of financial activities. If we exclude the factor of virtual economy, the United States actual GDP is about 5 trillion US dollars in 2009, per capita GDP about $ 15,000." ~ Dagong ratings agency (disputes $17 trillion GDP)

"There has never been a fiat currency in history that did not end in hyper-inflation and complete collapse. [Geithner's most recent call for an] unlimited ceiling on USGovt debt for the US] was just telling the truth on an open-ended money printing policy by the Fed. All it is doing is postponing a problem until it makes it bigger and eventually it blows up. [It is too late for remedies to the economy.] We have passed the point of this getting fixed. [A formal audit of the Fed's official foreign gold accounts would cause a] gigantic short-covering rally, multiple bankruptcies, and a massive loss of confidence in the dollar [because much of the gold is gone or leased out.] The gold price could easily double [from the current price.] What has kept the price down is the artificial leased gold going onto the markets [for dumping purposes.]" ~ Nick Barisheff (CEO of Bullion Management Group)

"Do you remember all the talk back in 2009 and early 2010 about the Fed's Exit Plan? How the economy was recovering and the Fed would need to tighten and reduce their balance sheet? Did you laugh when you first heard the words Exit Plan as I did? Here we are nearly three years later with the Fed balance sheet more than 50% greater than it was back then. The economy is still stuck in the mud. The financial markets walking a precarious tightrope. And now not only are banks in trouble but sovereign governments as well, including the USofA. Exit Plan? EXIT PLAN??? In what world could the Fed even consider withdrawing any stimulus? I do want to add that the Fed is a little bit levered themselves. Their $3 trillion balance sheet is supported by a whopping $55 billion! They are levered over 50 to 1. Another way to look at it is that they have 2% equity carrying over 98% of the load." ~ Bill Holter (in agreement with the Jackass, who mocked both Green Shoots and Exit Strategy in 2009, but who refuses to call the USFed actions stimulus)

"If you look over the last 10 to 15 years, the clever governments have been buying gold and the idiots have been selling gold. And those that buy gold do not just buy paper. They make sure they have physically got the stuff." ~ Nigel Farage (leader of the United Kingdom Independence Party, member of the European Parliament)

"Funny how the anti-gold crowd led by Wall Street does not spout their propaganda anymore. No more mention of how Gold earns no yield, now that the USTreasurys earn 0%. The capital gains will rise for Gold even as they decline for USTreasurys in a very captivating display, when the USGovt debt bubble busts. It is their last asset bubble, propped by a Weimar printing press and hidden powerful leveraged derivatives." ~ Jackass

See the Special Report entitled "National Disorder, Decline & Control" for December. It features a Jackass commentary on the nation, which has gone national socialist. A great many residents of the United States will become paupers, debt slaves, and possibly camp residents. Self-protection will be a formidable challenge. Three centers of global evil predominate with protected crime, dispensed pain, scattered puppet strings, and unspeakable build-up of wealth. The FEMA camps are very real. Their first residents are most likely to be the dispossessed and jobless who cause problems in the public arena. Violence and disorder will not be tolerated. They will bring more advanced technology to the past concept model. Expect the count of people entering to be greater than its inventory population. An assault on the nation is planned. Few are aware. Civil disorder is a guarantee, since martial law is desired. A series of executive decrees matters little in the American awareness, but they outline a fascist police state. Protocol is being drafted for usage of camps, urban assault vehicles, and overhead urban drones. The USGovt has built a data center with greater than 100 terabit capacity for storing information on all citizens. The monitor and storage of information is a national priority, in keeping with the fascism theme. American military contractors are prominent in the world of weapon sales. The United States leads in export of military weaponry with great destructive capacity. It does not contribute to USEconomic strength.

## INTRO MONETARY FRAGMENTS

◄$$$ A SOCIAL CATASTROPHE FOR THE UNITED STATES AWAITS. POVERTY AND HUNGER WILL PREVAIL. THE PROOF OF THE UNITED STATES FALLING INTO THE THIRD WORLD IS ELUSIVE. $$$

The data screams of several pathways with growing legions of members. The number of Americans receiving Food Stamps reached a new record in August this year, at 47.1 million people. That is two of every 13 people, according to the USDept Agriculture. Fully 20% of households in the state of Mississippi are on Food Stamp aid. The figure has risen by 50% since October 2008. A bill is before the USCongress to slash $billions from the program. The official calculation measures 49.7 million people living beneath the poverty line in the United States, or 16.1% of the total population, according to the US Census Bureau. In 2006 there were 37.3 million people in poverty and 12.5% was the official poverty rate. The California poverty rate is at 23.5%, nearly one in four residents in the once highly prosperous giant state. The Census data revealed that median household income in America, adjusted for inflation, fell by 1.5% from the previous year. The figure was 8.1% lower than in 2007 and 8.9% lower than its high point in 1999. Factor in a realistic CPI inflation rate, and the income decline in the real world is much worse. The income of the typical US family is falling every single year.

In 2011, jobless insurance helped 26 million workers, and lifted 2.3 million people, including more than 600,000 children, above the poverty line. However, imposed limits on jobless aid are taking a toll. In 2010, about 67% of people counted in the UGovt official unemployment figures received unemployment benefits. By 2011, only 54% received jobless aid. This year the figure fell to only 45%, according to the National Employment Law Project. The federally extended unemployment benefits are due to end by December 31st. They were implemented in response to a powerful economic recession and chronic jobless condition. When the program is ended, two million people will be cut off, at which time the standard aid will cover only 26 weeks of jobless insurance. Let it be known that the Jackass was laid off from a good professional staff position in August 2003, at which time the groundwork was laid for launching the Hat Trick Letter. See the Global Research article (CLICK HERE).

◄$$$ A GREAT GLOBAL SKILLS GAP EXISTS. EXCEPT IN GERMANY AND INDIA, THE BIAS IS AWAY FROM VOCATIONAL TRADES. PROVIDERS OF TRAINING ARE NOT AWARE OF THEIR OWN INADEQUACY. $$$

A growing skills gap can be identified from a recent McKinsey survey. The mismatch is marked by high youth unemployment around the world, despite a multitude of job vacancies. Blame it on a skills shortage, which 39% of employers claim prevents them from filling entry level jobs. Alarmingly, in most of the world under half of students believe their educations prepare them adequately for careers or even finding jobs. Employers are aware that the education & training systems are not working. Students are also aware. Yet educational institutions apparently do not share in the important awareness of their own inadequacy. They serve somewhat as elite institutions beyond rebuke, demanding the respect of near nobility. The feedback loop from the work centers to the training centers is not properly functioning. While students prefer hands-on and on the job learning, regading them as more effective, even vocational schools fail typically to make such valuable experience a priority.

An elitist element persists. Despite leaders and pundits praising vocational training, few parents choose such schools for the children. A stigma exists. McKinsey found that every surveyed country except Germany places higher values on academic paths over vocational ones. Solutions surely require for educators to alter their arrogant manner. Solutions require for employers to invest more in training, even to raise wages when trade skills are in short supply. Solutions require for societies to alter their norms. Expect the shortage of highly skilled workers to increase, the gap to worsen. No established feedback loop is working properly. See the Business Insider article (CLICK HERE).

The United States has legions of trained students who expect the USEconomy to work efficiently within a capitalist system. That system has degraded much worse than the typical students realize. Too many students, responsible with their work, have fallen victim to student loan indebtedness. Many continue to live at home, unable to begin new households and to fulfill life dreams. The United States also has legions of unprepared college graduates who did not take their years seriously, with choices taken for easier classes. Also, far too many lawyers litter the American landscape and not enough engineers and science professionals. Silicon Valley in California is loaded with foreigners on work visas. Coddling to students who dislike either math or science cannot be tolerated. Bone up and acquire some skills. Too many equivalents to basket weaving exist in college curriculums.

One quarter of US college graduates in my estimation specialized in gallant festivity and inebriation with streams of parties and hot sexual pursuit for carnal pleasures, the orgy finished after four years with low standards applied. No guidance counseling is typically offered in US colleges. In high school, some fool in the guidance counselor office recommended French as a foreign language to the Jackass. An award was won in the junior year among 150 students, to little avail.. So Spanish is learned on my own in Central America, where maybe 40% fluency has been achieved. Lo que sea! My discovery of Statistics in college happened as major electives were satisfied, sort of by accident. Student independence often backfires in graduation with inadequate training, then often near total confusion on career choices. Career counseling is worth the small fee spent, early in college. Decisions for professional school often seem arbitrary and poorly planned.

◄$$$ THE FACE OF WHAT SYSTEMIC FAILURE LOOKS LIKE IS SLOWING BECOMING APPARENT. THE PICTURE SLOWLY BECOMES MORE CLEAR. $$$


The vast insolvency permeates the entire US nation, well described and even forecasted within the Hat Trick Letter. Banks no longer function as credit suppliers, nor as company incubators. Households are largely wiped out of home equity, most life savings stuck in the stock market and bond market. The USGovt is indescribably bankrupt, that fact more evident to the masses with each passing year. The endless war has ransacked the nation, the decades of war having causing at least half of the entire $17 trillion in accumulated debt. Yet the military budget remains as sacred as the wars. Factories have in the main been shut down or dispatched to Asia where labor is cheaper and unions are less demanding. The central bank policy is to offer money at zero cost for the connected tribes and to purchase unlimited bonds to keep the system running. However, the system is failing.

The face of failure will be many sided. There will be supply line disruptions in food and commodities from the vast Mississippi River artery. There will be storms and earthquakes which add to significant disruption and economic damage, whose origins are suspicious. There will be rising cost of living for the entire worker class, with angry feedback in form of strikes. This is the fuse to light the powderkeg in my view. The official US security stance against terror threats contributes to isolation on a global level. There will be USDollar currency caught in isolation, not widely accepted by foreign suppliers, forcing extreme economic duress. The isolation grows each month, hastened ironically by the Iran sanctions. There already is broken USGovt apparatus on debt management, with a possible failure to raise debt limit soon. The forced across the board USGovt budget cuts will push the system into a grand stumble. The effect on the USEconomy will be profound. The recession has been a constant at minus 4% to minus 6% annually since 2008 in the world of reality with proper accounting.


Expect deep anger and resentment among the population for political class, not only the banker class. The awareness of banker control of the USGovt is the newest element in popular movements laden with demonstrations. But the right to demonstrate and the right to speak freely have been rescinded by edict decrees. The business sector frustration with the central bank and its monetary policy has reached a critical level, enough for numerous groups to solicit the White House and Congress, but to no avail. There is wide recognition of crime and impunity at the highest levels of national leadership. The most vulnerable points in my estimation are gasoline stations and grocery supermarkets. These are the locations of violence to erupt out of public need and desperation. The wild card is a rash of cancer from Fukishima radiation that spreads across entire northern states, but with zero reporting by the news networks. The FEMA Camps should begin to fill very soon, as the economy distintegrates further and disorder grows worse. The level of public anger is rising fast.

◄$$$ A SYSTEMIC BREAKDOWN IS COMING. NEITHER CENTRAL BANKS NOR LEADING GOVERNMENTS CAN PREVENT IT. NO ACTIONS TO DATE CONSTITUTE A REMEDY. NO SOLUTIONS ARE BEING ATTEMPTED, ONLY POWER PRESERVATION BY THE BIG BANKS, STILL NOT LIQUIDATED ALTHOUGH HOLLOW GIANT STRUCTURES. THE SYSTEM IS STUCK UNTIL COLLAPSE. $$$

When USFed Chairman Ben Bernanke announced in the second December week that the official interest rate would remain near 0% forever and a day, and that bond purchases with toxic new money would continue without limit, he showed the face of a failed institution, and a failed central bank franchise system. Witness a failed state, since the bankers wrested control at the staged 911 quickening. Bernanke even made vague comments to disavow blatantly wrong forecasts, since his miserable track record reads the exact opposite of the Jackass. He looks tired, frustrated, out of ideas, annoyed by the demonstrated proof of his PhD thesis falsity. Recall this man loudly urged that the subprime mortgage crisis was contained in 2007, when the Jackass rebutted that the bond crisis was absolute (sure to reach all bonds). Perhaps he should take a long rest at Jackson Hole. He must realize the job was offered to him as a bagman, to preside over the systemic failure and monetary system collapse. Heightened liquidity is no solution to a dreadfully insolvent system, a basic tenet that escapes him and most of his incompetent band of high priests.

Bernanke (Magoo Jr) frustrated

Those at the Syndicate helm cannot hike interest rates, or else collapse the system. They cannot stop bond purchases, or else collapse the system. They cannot cut off big bank bond redemptions, or else collapse the system. They cannot stop filling the Fannie Mae and AIG black holes, or else collapse the system. They cannot end the Dollar Swap Facility for foreign usage, or else collapse the system. However, the system will collapse anyway, from its own sheer weight and the eroding pillars they constructed. Expect broad seizures in numerous chambers, from the bond market to the currency market to the big banks to trade settlement to oil shipments to supply chains. My best source, a brilliant man with keen insight and contacts on every continent, commented to my broad collapse unavoidability comment. He said, "To be sure, the system in its entirety will collapse and then it is over, once and for all. But the Gold market will survive in an un-manipulated fashion. Gold will serve as the backbone of the new commodity backed money with all other commodities grouped and layered around it. Investments in Gold will not just survive the collapse, they will thrive."

Carry on with the self-protection in precious metals, with a deferral of all paper based securities destined to be flushed. A great evaporation of paper wealth is in progress. A bright colleague connected to the Chicago pits added a great comment. He said, "The real indication of what is coming is that the announcement of a half $trillion of unsterilized money creation had no impact last week, after $2 trillion of past bond purchases also had no impact." No solutions lie in their empty bag of tools.

◄$$$ WARNING ALARMS ARE GOING OFF AND FEW NOTICE. THE Q.E. TO INFINITY AND Z.I.R.P. MONETARY POLICIES APPLIED FOREVER ACTUALLY ASSURE THE COLLAPSE. THE BANKERS MUST KNOW IT. THE LATEST ANNOUNCEMENT OF ANOTHER $1 TRILLION IN BOND PURCHASES PRODUCED A NASTY BACKLASH IN BERNANKE'S FACE LAST WEEK. $$$

A few highly interesting responses were felt last week, much like a big splash of icy cold water in winter. Usually after begging for more USFed action, the financial markets respond favorably to the event. Not last week. Some big events are happening as the disaster unfolds. The awareness of no solution is beginning to take root. The USFed announced $1 trillion in further QE bond purchases, but the stock market did not rally. More importantly, the USDollar and the 10-year USTreasury sold off slightly. One might be led to conclude that the awareness level is rising fast of the toxic solutions heaped upon past layers of toxic solutions. The capital flight out of USDollar and its broken vehicles has begun. Also, the bond spread differential between 10year USTreasury and 10year German Bund went from 20 bpts to 36 bpts in the following day of market activity. Little noticed was a slight steepening of the 2-year versus 10-year bond spread on the USTreasury yield curve. That usually signals US credit deterioration from higher inflation expected. Thanks to the London Siren for the collection of observations that tie together the reaction.

◄$$$ THE TRANSPORTATION SAFETY ADMIN HAS A HUGE BUDGET. ITS VALUE IS UNCLEAR. THEIR EQUIPMENT IS MEDDLESOME. THE HEIGHTENED SECURITY MEASURES SEEM INEFFECTIVE IN IDENTIFYING DOMESTIC AGENTS OF MAYHEM, FRAUD, THEFTS, AND TREASON FROM INSIDE THE USGOVT PROTECTED WALLS. NEXT COMES CHECKPOINTS AT THE MAJOR HIGHWAYS ACROSS THE VAST LAND. BENEFITS SEEM NOWHERE. $$$

More seriously, the Transportation Security Admin (TSA) is tightening its grip on domestic travel. The future will see a coordinated and systematic police control of internal travel within America. The groundwork is being laid. Placed in the November issue of the Federal Registry were details. The official request stated, "TSA's Highway BASE program (Baseline Assessment for Security Enhancement) seeks to establish the current state of security gaps and implemented counter-measures throughout the highway mode of transportation by posing questions to major transportation asset owners and operators." For example consider an owner and the drivers of a long-haul truck company, who must likely submit to interrogation on highway entry ramps. The application continues, "Data and results collected through the Highway BASE program will inform TSA's policy and program initiatives and allow TSA to provide focused resources and tools to enhance the overall security posture within the surface transportation community." The TSA influence at airports will be spread to the nation's vast roadway system. Expect slowdowns, less efficiency, higher cost, which might be the objective. They want martial law and totalitarian power in my view.

Wendy McElroy of the Dollar Vigilante wrote, "The application for funding from the TSA constitutes a preliminary step toward systematically expanding TSA's authority from airports to highways and almost every other means of public travel. The expansion would erase one of the last remaining differences between the US and a total police state; namely, the ability to travel internally without being under police surveillance. The total police state you experience at airports wants to spill into roads and bus stops, to subways and trains. Or rather, the TSA wants to solidify and spread the fledgling and erratic presence it already has."

McElroy is a student of travel law. She gives warning. "The Constitution will not protect the right to travel. Although many legal scholars consider it to be a Constitutional right akin to freedom of association, the word TRAVEL or its equivalent does not appear in the document except to guarantee the right of Congress members to travel back and forth from work. The Supreme Court case Saenz vs Roe (1999) rejected the Constitutional basis of free travel and rooted it instead within judicial precedent. These are weak roots and shallow soil." The obtrusive TSA agents in whatever guise or pretext are coming to the highway, bus stops, and train stations on your pathways. See the Safe Haven article (CLICK HERE). Recognition of nazi treatment will come very soon, and jackboots noticed. America, bend over!

## USTREASURYS & THE ABYSS

◄$$$ THE USGOVT DEBT WILL SURPASS THE US-GDP VERY SOON. THE USECONOMY IS ON A FLAT LINE, SOON TO CLEARLY TURN DOWN EVEN AFTER UPWARD OFFICIAL BIAS. THE EVENT WILL PASS A MAJOR SIGNPOST AND USHER THE WAY TO THE THIRD WORLD, INCLUDING AWARENESS. $$$

The trajectory is frightening. The Gross Domestic Product for the United States is flat. In reality, apart from the hokey gimmicks for hedonic adjustments, the GDP has actually been turning down by 4% to 6% per year since 2008 in a chronic powerful recession. The storm in the NorthEast and the drought in the MidWest and the dry Mississippi River ensure another negative economic growth for the year. Yet the trajectory for the USGovt debt which matches stride with the debt limit, is going vertical. The national debt has roughly doubled in the last ten years, with much of the increase due to the endless sacred narco war that demands military honor guards at sports events. As the United States moves into new ground with a debt larger than its economic size, it will join its weak brethren among the Southern European cripples, then later the African travesties. By the way, the USGovt went over the fiscal cliff three years ago, with annual deficits over $1.3 trillion, precisely as forecasted by the Jackass in late 2008. The cumulative debt has grown wild since then. The impact crater is being identified at the bottom of the chasm with chalk lines. The cliff is a grand misnomer. Vertical descent is here.

A comment to pass on, a story that comes from a source with connections in the US security agencies. He tells that a plan is being considered to put the USFed under the Dept Treasury within the USGovt. The timing of the event could be early 2013, but the Jackass doubts implementation is possible. It is too bold, too submissive, too resigned. To do so would be forfeiture by the central bank of its syndicate role and an admission of shameful defeat by private castle dweller interests. They have far more $trillions to hand to themselves. To fold would be a resignation of the central bank. Perhaps such a threat will be passed on, which would move the intransigent political muppets on budget compromise. If the USFed were wrapped under the USGovt finance ministry, such an event would invite immediate monetization of the entire USFed toxic balance sheet by turning levers at the USDept Treasury. It would enable immediate ownership of $trillions in mortgage bonds. It would pave the way for the marxist nation to practice collectivism and majority ownership of property. My best gold trader source, with knowledge far beyond the gold market, does not believe the catastrophe underway will unfold in such a way as to fold the US central bank under the USGovt finance ministry. But at least, the Jackass passes on the plan, even not implemented. The source of the USFed plan plus The Voice serve as two solid information sources, which often confirm each other, but not always.

The Federal Reserve contract, its lease on money, expires on December 31, 2012. Amazing, not one word is being spoken about it in the national press networks, among Congress members, not even the leader in the White House. The contract ends 99 years after its inception in 1913. That vote long ago took place during a sparsely attended Christmas holiday session. The uproar over the vote, a ramrod to be sure, prompted passage of a rule requirement, that a quorum had to be present in order to conduct any legislation approval. In less then half a month, it expires, along with the current year. Some big changes could be coming, difficult to know. Most likely, another 99 years has already been secretly passed. Midnight vote conducted in a Congressional hall closet !!

◄$$$ THE USGOVT DEFICITS ARE ACCELERATING, EVIDENCE IS THE 24% RISE IN THE FIRST TWO MONTHS OF THE FISCAL YEAR VERSUS LAST YEAR. A FRESH $292 BILLION DEFICIT HAS BEEN RACKED UP IN JUST TWO MONTHS OF FISCAL 2013. OBSERVE THE GALLOPPING STEALTH RECESSION. $$$

The USGovt deficits are growing worse, in the wrong direction. The tax receipts are in decline, with few noticing. The social network costs continue. The war costs continue. The first two months posted deficits 24% greater than last year. The recession in the USEconomy is degrading rapidly with almost zero recognition outside the Hat Trick Letter. The USFed will never be in a position to stop the monetizing of the debt, since the main legacy foreign borrowers are pulling back. The promise to continue the central bank bond purchases with free money until the jobless rate falls is an admission to perpetuate the bond monetization forever, since the official monetary policy is killing capital, shrinking profits, and cutting jobs. The USFed will be using an infinite free monetization rein. See the Zero Hedge article (CLICK HERE). Notice the higher bars in the chart for the new fiscal year versus last year.

◄$$$ FISCAL CLIFF NEGOTIATIONS ARE A CONTINUED THEATER OF THE ABSURD AND CLUMSY, ALONG WITH INCOMPETENT AND COMPROMISED. THE JACKASS VIEW HOLDS THAT THE BROAD SPENDING CUTS, CALLED THE FISCAL CLIFF, WAS DESIGNED TO GO OVER. IT WAS DESIGNED TO FORCE THE BROAD SPENDING CUTS WITHOUT ASSIGNMENT OF BLAME. BROAD TAX REFORM, ENTITLEMENT REFORM, AND END TO WAR COSTS WILL NOT COME ANYTIME SOON. EXPECT TOUGH DECISIONS ONLY WHEN THE USGOVT FACES MORE DEBT DOWNGRADES AND GLOBAL ISOLATION ON USTBONDS. THE USGOVT DEBT & OBLIGATIONS IS MUCH LARGER THAN REPORTED. $$$

It will still be interesting to watch. The marxists and fascists are on opposite sides of the USGovt budget table. The polarization is akin to Hitler and Stalin over the European threater. The preservation of entitlements for the poor, disabled, jobless, dispossessed, retired, and otherwise idle portion of the US population must be catered to, since they comprise the majority. They cast their votes in a pathetic mandate, in the march to popular socialism. The resistance to higher taxes on the rich, the middle class, and all of business sector must be prevented, unless the desire is to force a deeper recession. Socialists care little of such details. Awareness of the impact of higher taxes has been a blind spot for the liberals for decades. They equate higher tax rates with higher tax revenues, always incorrect, never a learned concept, basically because they are economic morons. For the conservatives, they are simply fed up paying for the massive welfare state. Yet the business sector must bear their own responsibility for decisions to move factories to Asia, thus abandoning the US workers, even if they were obstinate with labor union demands. Germany has had decades of strong labor unions, but they did not cave in toward relocation to China. They made difficult concessions. The US business sector did not. Germany remains economically viable. The US does not.

A note on the Obama Admin and its approach to the so-called fiscal cliff. The President has appointed Treasury Secy Geithner as the chief negotiator on the fiscal negotiations, which seems strange on several fronts. He has no experience dealing with Congress. He is a lame duck with no real power left with Congress, since he has already announced he will be leaving in January. He is a complete stooge and likely is viewed in contempt by many members of the USCongress. He is viewed as a finance minister lacking any semblance of visions during the four years of storms, a GSax tool to process demands and guard the door. The only person in the Cabinet that has deep connections to the Hill is Vice President Biden. Sadly, Biden has chosen to operate as a foreign policy wonk (stooge) instead of bringing to bear his Senate experience. He prefers to sit at Council on Foreign Relations functions, with free lunch served. Some believe Obama chose Geithner to sabotage the negotiations, to ensure their failure, and to attempt to put the blame on the House. Any substantive progress will be done next year with the new Congress. If the blame cannot be put on Boehner in the House, then Geithner will be blamed. The President is not about compromise, make progress, or pursue development in any way shape or form. He plays politics with the budget, with the labor unions, with the media, with the embassy attacks, with the war, with the charisma, and with the teleprompter during debates (in his ear). He is the epitome of demagogue. Bush II was an miscreant and a moral leper who ransacked the nation and brought fascism. Obama is a manchurian candidate and demagogue who is determined to ransack the nation further and establish marxism. The United States will soon represent the worst of both fascism (larcenous banks ushering in poverty) and marxism (dead economy ensuring broad poverty with collectivism).

◄$$$ EDITORIAL COMMENTARY STREAMS IN, NONE COMPLIMENTARY. $$$

Satyajit Das is a veteran expert on derivatives and risk management with a long stellar track record. He refers instead to the several debt mountains fixed on the American landscape, noting that going over the fiscal cliff will solve none of the debt problems. The obstacles fixed within Social Security, Medicare, and Medicare seem as insurmountable as the state and municipal debt obligations. He foresees the automatic tax increases, non-renewal of tax cuts, and spending cuts as equivalent to a  hit of about 5% to GDP. That is a hefty added downward push to the existing stuck recession. The automatic spending cuts are a mere first installment to bringing US public finances under control. The solution process requires bringing budget deficits down, through spending cuts, tax increases, or a combination. The fiscal cliff is merely a step down that long road. The true solution is debt default with restructure, as the numerous austerity programs in Europe has proved unmistakably. Achieving progress is unlikely on the big thorny issues necessary to put the public finances in viable sustainable condition. The major constraint is the requisite increase to the USGovt borrowing cap imposed by a debt limit. It is currently at $16.4 trillion, which will be reached late in December 2012 or very early 2013.

Expect the politicians to do the least required, to stall the longest possible, to make the fewest concessions, and to agree to the smallest deals, then to extend the debt limit. They are not leaders. They are cheap harlots in the pocket of the bankers and big business, if not the foreign policy think tanks that control too much of the nation. The public purse is wrecked by too many hands and not enough heads, precisely as the communist ideologues wrote. Expect progress only when a crisis over the debt limit spreads to rating agency downgrade of official USGovt debt and perhaps more recognition of the USFed having turned Weimar in an extremely dangerous stuck policy position. See the Econo Monitor article by Das (CLICK HERE).

Furthermore, there is no possibility of inflating the monster debt away. The same is true for Europe. Over the course of the last 50 years, the United States installed a social net in many forms. It began with the Lyndon Johnson Great Society movement, whose installed is remembered well when the Jackass was a young teenager. Back then, the nation could afford it, but no longer. The USGovt does not have to submit accounting statements like a corporation. If it did, the obligations for pension and medical coverage, plus prescription drugs, would be an enormous addition to the debt perceived. Chris Cox and Bill Archer summarize when they wrote the following.

"As a result, fiscal policy discussions generally focus on current-year budget deficits, the accumulated national debt, and the relationships between these two items and gross domestic product. We most often hear about the alarming $15.96 trillion national debt (more than 100% of GDP), and the 2012 budget deficit of $1.1 trillion (6.97% of GDP). As dangerous as those numbers are, they do not begin to tell the story of the federal government's true liabilities. The actual liabilities of the federal government including Social Security, Medicare, and federal employees future retirement benefits, already exceed $86.8 trillion, or 550% of GDP. For the year ending December 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure.

Why haven't Americans heard about the titanic $86.8 trillion liability from these programs? One reason: The actual figures do not appear in black and white on any balance sheet. But it is possible to discover them. Included in the annual Medicare Trustee report are separate actuarial estimates of the unfunded liability for Medicare Part A (the hospital portion), Part B (medical insurance), and Part D (prescription drug coverage). As of the most recent Trustee report in April, the net present value of the unfunded liability of Medicare was $42.8 trillion. The comparable balance sheet liability for Social Security is $20.5 trillion." See the Wall Street Journal article (CLICK HERE).

◄$$$ THE ADJUSTED MONETARY BASE MIGHT HAVE A BIG DELAYED REACTION IN A SUDDEN UPWARD MOVE. THE USFED IS REPORTEDLY BUYING MORTGAGE BONDS ON A WHEN-ISSUED BASIS. THE DATA IS DECEPTIVE. A SUDDEN JUMP IN THE MONETARY BASE COULD LIFT THE GOLD PRICE IN A BIG WAY, SINCE THEY ARE TIGHTLY CORRELATED. $$$

Some astute observations have been made on the St Louis Fed, which tracks the monetary base. This important monetary aggregate has not grown at all in the course of the past year and a half, not since July 2011. Recall that QE2 and Operation Twist have occurred during this timespan. Despite the great wailing and gnashing of teeth on the part of the hard money advocates and the gold bugs about the Fed's balance sheet exploding, it has not been expanding by leaps and bounds. A source close to the USFed, possibly involved as a primary bond dealer informs that the USFed has been buying mortgage backed securities on what is essentially a When-Issued basis. Those securities have not yet shown up on the USFed balance sheet. A flood will begin to arrive on their balance sheet in mid-December. If correct, then by late December or early January the adjusted base should explode to the upside with much fanfare and harried defense. Typically the Gold price responds with a correlative movement to the monetary base, as history will show. In fact, Gold is not priced higher, but rather the USDollar is price lower in fixed stable Gold terms. The critical data should be released soon.

◄$$$ WARREN BUFFET HAS TURNED INTO A BLATANT HARLOT WITHOUT EITHER BEAUTY OR MAKEUP. HIS CITATION OF JAMIE DIMON FOR THE TREASURY SECRETARY POST REEKS OF PANDERING. DIMON IS A SYNDICATE DON, OF STATURE LIKE PAULSEN. SUCH AN APPOINTMENT OF DIMON WOULD IMPLICITLY SIGNAL THE MANAGED DEATH OF THE HOUSE OF MORGAN. $$$

To consider JPMorgan CEO Jamie Dimon as a candidate for the important Treasury Secretary post, one must put aside both the wrecked JPMorgan colossus and the legal prosecutions the giant bank faces. Warren Buffet lost my respect when he lied openly about his silver position years ago. He paid a club membership fee three years ago with an outsized investment in Goldman Sachs. Lately, he has made stupid comments about the wealthy paying higher taxes, as though that would solve even 1% of 1% of the deficit problem. He has come forward suggesting Dimon would make an ideal Treasury Secretary. Such an appointment would be very difficult to approve in the Senate, given the embarrassment this summer over Whale losses, exposure of Interest Rate Swap activity, alongside an endless stream of litigation over mortgage bond investment fraud and mortgage contract fraud.

If Dimon takes the finance post, it would mean that the USGovt admits the JPMorgan giant bank is dying, and must be managed for the complete final impact. It would mean the USTreasury Bond tower is set to collapse, with knowledge behind the curtains where derivative are holding the teetering tower. Dimon in his primary post could bend favor to the corrupt croaking colossus. Since the summer when the massive understated losses hit the giant bank, the Jackass has been convinced that the House of Morgan will die in the not too distant future. My best source reported in June that powerful Eastern entities have sabotaged the JPMorgan derivative structure that supports the USTreasury Bond, the damage done in an irreversible manner. What remains is the unstoppable progression in collapse. See the News Max article (CLICK HERE).

◄$$$ USAGE OF THE NEGATIVE INTEREST RATE (BARRICADE) IS BEING USED TO CONTROL MOVEMENT OF FUNDS WHERE NOT DESIRED. NEGATIVE SHORT-TERM RATES IN SWITZERLAND ARE BEING USED TO BLOCK THE DOOR ON FLIGHT OF FUNDS. THE TREND WILL GROW WORSE. REGARD THE SIGNAL AS A BAD ECHO FROM OFFICIAL 0% RATES IN AN ESCLATION OF THE COMPETING CURRENCY WARS. $$$

Sooner or later, companies and very wealthy individuals will turn away from sovereign bonds that offer next to nothing. Well, the Swiss offer less than nothing. Their central bank announced in early December that it will charge for firms to hold a Swiss Franc cash balance. Swiss banks are furiously doing everything in their power to halt the dumping of EUR in exchange for CHF. The investors will find Gold, which despite no yield payout offers capital gains. In fact, later on the Swiss Franc will offer a sudden upward revaluation that will produce capital gains also. The sovereign bonds offer likely huge principal losses by comparison. Credit Suisse has moved to a negative yield policy. They do not want foreign funds any longer. The Swiss Franc is at risk of exploding much higher, sure to ravage their economy. Investors should refuse to pay 0.75% to store idle or extra or saved funds with the Swiss banks. They clearly are trying to force money out of the Swiss Franc and into the Euro currency, where the US banks and London banks and Swiss banks and big Euro banks are all trapped with PIIGS paper.

Desperation grows. After four years of bad patches, reckless monetary actions, obscene bond redemption, nasty austerity programs imposed, and awkward dances over extended loan repayment, overall conditions are starting to look worse than before the 2008 bubble. Tyler Durden summarized, "The need to do this suggests an overwhelming desire for short-term safety that flies in the face of the seeming level of complacency that exists in the European bond (and stock markets). As we have warned before, it seems that the Currency Wars that appear to have escalated have now started the Capital Control wars as Credit Suisse (and implicitly the Swiss National Bank) adds this negative interest rate charge [cost deterrent] to its already pegged currency in the vain hope of managing the unmanageable flow of safe-haven-seeking cash." See the Zero Hedge article (CLICK HERE). At risk next is the perceptions of central bank franchise system integrity, recognition of bank system insolvency, and the charade of paper currency toxic spew seen as dangerous. The Competing Currency War is going to the next higher level.

◄$$$ THE EUROPEAN RESCUE FUND WAS DOWNGRADED BY MOODYS. THE ULTIMATE INSULT WENT LARGELY UNNOTICED BY THE MEDIA. THE VEHICLE IS BROKEN, THE DRIVERS INSOLVENT, THE SOLUTION NULL & VOID, THE EMBARRASSMENT TOTAL. THE LIQUIDATION SOLUTION IS AVOIDED AT ALL COSTS, WITH LAYER UPON LAYER OF EURO-CB PAPER MACHE APPLIED. THE FRENCH GOVT BOND WAS DOWNGRADED, ITS CHERISHED AAA RATING GONE. $$$

Despite the embarrassment, Mario Draghi could be voted Man of the Year, or better the Lord of the (Flypaper) Flies. The Jackass has called the EFSF fund the Draghi Still-born baby, rightly so. It failed within 40-45 days out of the gate. The Draghi Euro Central Bank offered higher subordinated bonds to big European banks, who gobbled them up only to purchase overvalued sovereign bonds. The French, Spanish, and Italian Govt Bonds had artificially been raised in value by the EuroCB itself from pump projects. The EFSF fund's failure should have forced Draghi's resignation, but the royal bankers value dedication over integrity. In late November, the credit rating agency Moodys Investors Service cut its rating for the EuroZone rescue funds ESM and EFSF to Aa1 from Aaa. A clownish empty rebuttal came from the Brussels bowels of irrelevance. The anti-brain trust in the European Financial Stability Facility and the European Stability Mechanism issued a statement on the same day as the debt downgrade was announced. They took exception. "We disagree with the rating agency's approach which does not sufficiently acknowledge ESM's exceptionally strong institutional framework, political commitment, and capital structure," said Klaus Regling. He is managing director of the ESM and chief executive of EFSF, but is neither correct nor relevant. The institutional framework has collapsed, while the capital structure lacks any capital. Regling needs to brush up on reality.

The EFSF downgrade decision came in the wake of the French Govt debt downgrade earlier in the month. Moodys stated the fund downgrade was prompted by the high correlation in credit risk among the rescue funds and their largest financial supporters. Moodys had completed the stripping of France from its prized AAA badge this month, cutting by one notch to Aa1 from Aaa. It cited fiscal problems (refer to socialism quagmires) and deteriorating economy (endless recession), but left out the flight of capital out of the second largest European nation. The agency said it kept a negative outlook for the new French credit rating, which implies yet more downgrades to come. Only Germany and Norway deserve a AAA rating, and no other nations period, none other in the entire world. The US-based debt rating agencies have been piling on the EuroZone nations with downgrades, ignoring the intractible corrosive pathetic USGovt situation. See the CNBC article (CLICK HERE) and the CNN article (CLICK HERE).

Friend and colleague Aaron Krowne of the Implode Explode website pitched in. He said, "The sham is falling apart as bloggers pointed out years ago when these mechanisms were being discussed and proposed. The poor solvency of the member states (guarantors) would defeat the purpose of having a creditworthy vehicle, based on anything besides spreading the cost to the North Europe bloc." The embarrassment is thick. Imagine the Europeans offering a downgrade of QE2 or Operation Twist by the USFed, although the American solutions do not pertain to specific bond vehicles. The monetary war might soon force Europeans to divest of USTreasury Bonds and USAgency Mortgage Bonds in defiance. The credit rating agencies are being used as financial weapons in the monetary war. The strategy is easy to see on its face. The US pillboxes lob grenades at the European financial fortresses, thus making the US fortresses appear stronger. Both are weak, both insolvent, both corrupt, both dying, both run by madmen.

◄$$$ THE B.I.S. HAS ISSUED A WARNING OF ANOTHER BUST IN THE FINANCIAL WORLD. THEY IDENTIFY AN OFFICIAL BOND BUBBLE, AND IMPLY A RESOLUTION COMES. THEY CLAIM HIGHER RISK SHOULD NOT GO HAND IN HAND WITH ULTRA-LOW BOND YIELDS. IF IT OCCURS, THEY HAD A ROLE IN IT WITH NEW RULES IMPOSED TO DE-LEVERAGE IN A SLOP OF RANKED TIERS FOR ASSETS. $$$

In a rather surprising admission through a research paper, the Bank For Intl Settlements has issued a warning of another 2008-style credit crisis event. The reference is to a systemic crash of the Lehman type. The BIS bank actually correctly forewarned of the 2008 credit bubble that did burst, perhaps not exactly as they expected since the warning was in vague terms. Again the warning is in vague terms, but still a valid warning. They implicitly admit that the solutions in the US and EuroZone and UK are patchwork paper mache projects that solve nothing. They do not say so explicitly, however. Never does the BIS suggest big bank liquidations, which is the urgent requirement and premier essential step toward any solution. In fact, the tighter Basel II and newer delayed Basel III Rules play a role in the gradual collapse.

The BIS has warned that another bubble has formed in the bond market, the largest liquidity pool on the planet. Since the sovereign bonds serve as foundation for the monetary system, this is indeed a much more dire warning that the mortgage bond threat in 2008. Bonds are valued at their lowest yields and highest principal in 30 years. They are correct in pointing out risk, but they should identify the USTreasury Bond as the biggest bubble in modern history. They do not. The BIS claims the global financial market has reached a tipping point. Note the anomaly that the big global banks are de-leveraging and cutting back on loans at a time when the bond markets continue to offer capital for almost nothing in return for the risk. Consider the warning a coronary attack signal that goes unheeded.

Blame belongs on the global central banks for artificially low interest rate regimes. The BIS report stated, "Some asset prices appeared highly valued in a historical context relative to indicators of their riskiness. Unusually, equity and fixed income gains coincided with a weakening of the global economic outlook. In the past, falling growth forecasts have usually been associated with rising expected default rates and higher bond yields." The non-government bonds tag along and display absurdly low bond yields, which in no way reflect the risk. The mortgage bond explosion from 2008 to 2010 demonstrated the unjustified low yields (high prices), resulting in catastrophic losses for bond investors seeking higher yield. By insisting on low government bond yields (stuck actually), the investment community is forced to chase the other bonds that do not deserve low yields. Savers are being abused. Risk is not properly priced.

The global government bond bubble is perverse and diverse. All nations are mired in recession, from the US to UK to Japan to Europe. The central banks are guilty of following the USFed lead, pushing rates down. The USFed orchestrates vast interest rate derivative machinery in hidden rooms, which push down bond yields. The entire risk model has gone amok. Risk is therefore universally present. The bond purchase programs by central banks are a travesty that invites a systemic failure. They are destroying the global financial structure. This point has been regularly made in the Hat Trick Letter reports. They play God but wreck all. Some like arrogant Blankfein at Goldman Sachs claim they do God's work, but they operate the Devil's workshop. They kill capital and cover up bond fraud, even counterfeit.

Major trauma comes in global financial markets once again, as resolution of grotesque imbalances must come. Huge losses for bond holders lie directly ahead, followed by debt restructure. The ugly conflicting harsh events come later on. Shifting out of bonds and into hard assets like precious metals is the best logical course for investors. See the Arabian Money article (CLICK HERE).

The warlocks in the BIS castle are financial warlords sitting in high perches, directing central bank traffic. These are past repositories of stolen central bank gold from wartorn lands. These are supra-nationals with no allegiance to a country, only to money and power. They are accountable to nobody and loyal perhaps only to Beelzebub. The BIS lieutenants routinely jack the gold market with ambushes. The BIS lieutenants subvert the process. Their history could not be more scummy, including nazi thefts in the 1940 decade, hidden in the BIS, justified as providing safe haven. The secretive bank has prefered since 1900 to conduct business without public notifications, without conference billings, without disclosure of truly nefarious deeds.

◄$$$ THE USGOVT PURSUES REPORTING FOREIGNER PENSION FUNDS, THE AGENDA YET UNKNOWN. THE PRESSURE WILL RESULT IN A WHIPLASH WHERE FOREIGN FUNDS WILL DIVEST AND DIVERSIFY OUT OF THE US$-BASED STOCKS AND BONDS. MORE ISOLATION WILL COME TO THE UNITED STATES, AS IT MARCHES TOWARD THEN PLUNGES INTO THE THIRD WORLD. THE USGOVT IS DESPERATE TO FIND BUYERS OF USTBONDS, EVEN IF BY FORCE. WATCH FOR A FORCIBLE CONVERSION TO SPECIAL USTBONDS, EVEN POSSIBLY FOR FOREIGN NATIONALS. $$$

A conversation took place two weeks ago with a good friend in Zurich. No language barrier since he is Irish. The Jackass spoke in Spanish with his wife for 15 minutes, but that was just showing off. In the course of catching up on several fronts, he mentioned something obtrusive and bothersome. The USGovt suddenly requires all Swiss investment funds related to pensions, even for foreign nationals (non-US citizens), to report details on investment assets. They wish to make account of US$-based securities within foreign pension funds. We surmised that in time some pressure could come to convert foreign pension funds into USTreasury Bonds. They might imitate the conversion of US citizen private pension funds into special USTBonds. My belief is that negotiations are underway between foreign governments, in particular European, and the USGovt, to forcibly convert US$-based securities into the same perverse non-interest bearing USTBond of putrid sanction. If done, it would a bold and nasty step. It would require the full leverage in cooperation by the foreign governments, in a betrayal of their own citizen interests. The Swiss might favor the forcible migration, since they do not wish for more foreign hunkering into Swiss Francs in any way.

◄$$$ MARK CARNEY FROM CANADA WILL TAKE THE REINS AT THE BANK OF ENGLAND IN A SURPRISE MOVE. EXCEPT THAT ONE MORE GOLDMAN SACHS HENCHMAN SITS IN AN IMPORTANT FINANCIAL SEAT. SPECULATION RUNS RIPE, AS DESPERATION RUNS DEEP. $$$

Just another Goldman Sachs hack, so is Mark Carney. One can only speculate as to what the British are doing. They must either be losing control or be forced to invite an outsider. At the same time, Carney will be in position to keep an eye on the US fortress and to maintain an open line to the US channels. As the fortress collapse is nigh, the entrenchment intensifies. Now Draghi at the Euro Central Bank is a GSax boy, Carney at the Bank of England is a GSax boy, Mario Monti at Prime Minister of Italy is a GSax boy, all agents doing God's work are being installed in key spots. It is no longer a sign of strength, but of desperation since they preside over waste lands and toxic paper sewage. Watch as rumblings stir, reported by Matt Taibbi, that Jamie Dimon from JPMorgan is being considered to take control of the USDept Treasury. See the UK Guardian article (CLICK HERE) and the Aziz Economics article (CLICK HERE).

## CENTRAL BANKS & GOLD

◄$$$ JAMES TURK DISCUSSES THE SLIPPERY ACCOUNTING METHODS USED BY CENTRAL BANKS THAT CONCEALS THE LEASE OF GOLD FROM OFFICIAL ACCOUNTS. GOLD BARS AND GOLD RECEIVABLES ARE GIVEN EQUAL STANDING IN CORRUPT ACCOUNTING METHODS. $$$

James Turk is Chairman of GoldMoney and co-author of "The Collapse of the Dollar" (published 2004). He is an expert in gold accounting, who has applied his craft to dissection of the GLD and SLV corrupt funds also. He has built a solid gold fund in GoldMoney based upon group collective allocated accounts, with vault services around the world. He claims that central banks are holding less in their physical gold reserves than many assume. They use simple accounting fraud methods. The central banks report gold and gold receivables as one line item on their balance sheets, making no distinction. That is like a company claiming Cash and Accounts Receivables are the same, a practice never done, never permitted. Hence the central banks are permitted to lease out physical gold in return for paper claims in the form of Gold Certificates, never to declare the leases on their books. The debated question is how much physical gold is left. Turk claims NOT MUCH AT ALL. See the GoldMoney interview (CLICK HERE).

◄$$$ AUSTRIA HAS DEMANDED ITS GOLD TO BE RETURNED FROM THE LONDON OFFICIAL ACCOUNT. IN FOCUS IS THEIR 280 TONS OF GOLD BULLION. THE AUSTRIANS TEND TO FOLLOW THE GERMAN LEAD, AS BERLIN DEMANDED FULL ACCOUNTING OF ITS GOLD IN NOVEMBER. THE PRESSURE IS ON THE LONDON BANK CRIME CENTER. $$$

The call has turned loud to bring Austrian gold back home from London. After some revelations came that the Austrian Nation Bank (OeNB) has been storing its gold reserves in England, the debate turned hot. In response to a formal question put before the bank by Parliament, the bank admitted that 224. 4 tonnes (80%) of Austrian gold reserves are located in the United Kingdom, around 6.9 tonnes (3%) are in Switzerland, and around 48.7 tonnes (17%) remain within Austrian borders. The OeNB actually stated that its gold is stored abroad to facilitate trade during a time of crisis. Since 2007, the Austrian National bank has maintained a constant reserve at 280 tons of gold bullion. Through leasing of its gold, the bank has earned a cool EUR 300 million, except it no longer owns the gold. The bank's governor Wolfgang Duchatczek stated, "The bank has always made it clear that our gold reserves are stored at the main gold trading centers." He cited London and Switzerland, specifically Basel. The domestically held gold is located at the Austrian Mint in Vienna, where the popular Philharmonic coins are made. See the Austrian Times article (CLICK HERE) or the Bullion Street article (CLICK HERE) or the GATA article (CLICK HERE). More pressure to expose the Allocated Gold Account scandal, with center in London and New York.

◄$$$ IN 1999, ONLY 15% OF OFFICIAL GOLD AT CENTRAL BANKS HAD BEEN LEASED, ACCORDING TO AN INTL MONETARY FUND STUDY. IN THE FOLLOWING 12 YEARS, LOGIC DICTATES FAR MORE OF THE GOLD RESERVES HAVE BEEN LEASED OUT. DURING THAT TIME, THE GOLD BULL MARKET WAS BORN AND FLOURISHED. THE GOLD PRICE ROSE OVER 5-FOLD. DEFENSE OF THE FIAT PAPER USDOLLAR-BASED SYSTEM HAS BEEN FIERCE. VERY LITTLE CENTRAL BANK GOLD REMAINS, MUCH LEASED WITHOUT ACCOUNT HOLDER KNOWLEDGE. THE TRUE GOLD PRICE SHOULD BE TWO TO THREE TIMES HIGHER. $$$

Many major sovereign bonds have found trouble since year 2000. The big US banks went insolvent. The USGovt finances went chronically into $trillion deficit. The USFed programs almost caused a run on the USDollar. Conjecture allows at least 50% and possibly 75% of official central bank gold has been leased, if loans from the Bank For Intl Settlements and Roman catacombs are factored. Many official accounts like the German and Dutch and Austrian have been leased out, without knowledge of the account owners. Many official accounts like the Venezuelan were replaced with urgency when demanded in return. The Allocated Gold Account scandal is moving toward center stage.

A study conducted by the Intl Monetary Fund in 1999 concluded that 80 central banks had leased 15% of official gold reserves. Factor in a decade of crisis and a deeply criminal Bush Admin, followed by a more desperate Obama Admin, both of whose Dept Treasury were run by the criminal syndicate lead dog Goldman Sachs, and it is a snap conclusion that a majority of the gold from central bank accounts is gone. GATA obtained (via researcher RM) the IMF report. A large amount of gold bullion held by central banks was leased and sold into the market. The participants were the German Bundesbank, the Swiss National Bank, the Bank of England, the Reserve Bank of Australia, and the central banks of Austria, Portugal, and Venezuela. It is doubtful that Portugal or Venezuela were aware. The IMF study was commissioned as the agency pondered selling some of its own gold. Key finding were the emphasis on the lack of transparency in the gold market, and the secrecy demanded by central banks.

As usual, the devil loves the darkness. Lack of transparency usually provides a breeding ground for criminal fraud. The study concluded, "Information on the gold market is patchy. Transactions are characterized by a high degree of secrecy. Apart from the relatively small amount of open trading on exchanges, gold trades are private, over-the-counter transactions, and little is reported on these transactions. Official information on gold lending is virtually non-existent." Ironically, the IMF study drew data from mostly private sources, they claimed.

To be sure, the IMF study was not written for public viewing purposes. It made an accurate conclusion that has been vigorously denied by the hack bankers and tool finance ministers for almost two decades. Even former USFed Chairman Greenspan had admitted that controlling the gold price was the primary objective of gold lending. The study concluded, "The increased mobilization of central bank reserves through gold lending operations has had a depressing influence on the spot price for gold since on-lent gold is usually associated with sales of gold in the spot market." The study went further into the actual mechanics of the leasing, interwoven with the gold producer forward sales. The practice of mining firm forward sales offered cloud cover for the central banks, who would merely claim they acted as efficient intermediaries in a sophisticated system. The study described as gold lending had caused central banks to become active in the gold derivatives market with bullion banks and gold producers, selling through forward contracts and sophisticated options. In turn, the bullion banks secured and consolidated long-term relationships with central banks.

While 80 central banks were identified as taking part in the gold lease market, the breakdown is important. The share of industrial nations in the stock of total official gold lending rose from 33% at year end 1995 to 46% by year end 1998. The rise was attributed to the Bundesbank and the Swiss National Bank, which both aggressively entered the market. Thirteen years later it seems likely that the proportion of central bank gold reserves that has been leased into the gold market is substantially higher. The same Western central banks have been forced to defend a broken and insolvent banking and bond system. They continue to demand secrecy for their gold lending even amid growing concerns about the security of their gold reserves vaulted abroad. They are hiding criminal activity with urgency, even as recent demands for repatriation are registered. See Germany, Austria, Netherlands, and Ecuador. These criminal bankers have broken the financial structures with bad economics, unsound money, and massive thefts. Expect that a true proper accounting would reveal perhaps 50% to 75% of official gold has been leased, sold, and dumped on the Gold market over the past 12 years. The true Gold price should be around $4000 to $5000 per ounce, right here, right now. The 1999 IMF study of gold lending has been posted at the GATA website (CLICK HERE).

◄$$$ THE BANK FOR INTL SETTLEMENTS HAS LET ITS GUARD DOWN ON DATA CONCERNING GOLD SWAPS AND SIGHT ACCOUNTS. A REDUCTION BY 60% IN GOLD SIGHT ACCOUNTS IS CONSISTENT WITH A VERY TIGHT GOLD MARKET THAT HAS REQUIRED OFFICIAL CENTRAL BANK GOLD TO BE SOLD. THEY HAVE BEEN BORROWING FROM THE B.I.S. SINCE 2009 IN HEAVY VOLUME. THE PRACTICE COVERS THEIR TRACKS IN ALLOCATED ACCOUNT RAIDS. $$$

The Bank For Intl Settlements has provided a report on gold swaps, a practice begun in 2009 that flourishes. Their detailed reports on gold hints at repatriation by central banks, which scramble to replaced leased gold bullion. Great changes have taken place to the gold banking business carried out by the BIS since March 2009 and its usage of gold derivatives. They are almost all gold swaps. They have grown from zero as of March 31, 2009. See the official BIS document in the 2012 interim report (CLICK HERE).

Since March 2009 there has been a significant change in the source of the gold deposited by the BIS with central banks in what are called gold sight accounts. The volume has fallen from 1197.45 tonnes as of March 31, 2009, to 509.43 tonnes as of September 30, 2012. By March 2010 the BIS had sourced 346 tonnes of gold in the form of gold swaps. One should note that the financial icon had never done such swaps for many years previously or at least not disclosed. By July 2010, BIS head Jaime Caruana admitted to the Financial Times that the swaps were regular commercial activities for the bank. In the event that the BIS could not have returned to it all the gold it has deposited in sight accounts as of September 2012, then it would run the risk of having to obtain up to 393 tonnes of gold on the open market to return to the gold swap counter-parties. This risk is not specifically considered in their own commentary on the risks it faces.

The nearly 60% reduction in the amount of gold deposited with the BIS in sight accounts is consistent with a desire by owners to exert greater control over their gold. Conclude with suspicion that gold swaps have indeed been abused by the BIS to supply gold to avoid a default by exposed central banks, precisely when requested formally to return the unallocated gold held in a sight account deposited with the BIS. The data supports the claim of a tight physical market for gold where certain central banks are taking action to get a firmer grip on their metal. The distrust grows.

◄$$$ GIVE DISRESPECT TO THE TEN YEAR ANNIVERSARY OF BERNANKE'S STUPID SPEECH. HE WILL EAT HIS WORDS, SINCE THE WEIMAR PRINTING PRESS CANNOT AND WILL NOT SOLVE THE CRISIS OF DEBT SATURATION, AND TOXIC SOVEREIGN BONDS. THE CENTRAL BANKS ARE EARNING CAPITAL DESTRUCTION, NOTHING MORE. GREATER LIQUIDITY, EVEN A TORRENT, HAS DONE NOTHING TO ADDRESS INSOLVENCY EXCEPT TO BUY TIME, AS IT FIXED NOTHING. THE USFED IS KILLING CAPITAL. $$$

The following dimwitted obtuse and ludicrous treatise was scribed by the inept professor serving as US Federal Reserve Chairman. He know less about economics than he does about money. And Ben Bernanke knows nothing about solutions to repair the current financial crisis, saddled by deep insolvency. His monetary policies with Zero Percent Interest Rate and Quantitative Easing are killing the USEconomy by lifting the cost structure, squeezing the profitability for businesses, and thus killing capital. His views on Gold are moronic to the core of the human intellect. His views on money creation are equally moronic to the core of the human intellect. In November 2012, Ben Shalom Bernanke wrote the following stupidity, which will be remembered when the USEconomy enters systemic failure and the USGovt debt enters default negotiations. He gave the speech to fellow economists, of equally bad training, at the National Economists Club in New York City.

"The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning. A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.

What has this got to do with monetary policy? Like gold, US dollars have value only to the extent that they are strictly limited in supply. But the US government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many US dollars as it wishes at essentially no cost. By increasing the number of US dollars in circulation, or even by credibly threatening to do so, the US government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."

That such mindless drivel would come from a PhD Economist is shocking. First, Gold can never be produced at zero cost. Thus a Straw Man's argument was given for confusion. The USGovt cannot produce USDollars at zero cost. Consider the impact of large volumes of newly produced USDollars. The impact is the rise in the entire cost structure for the global economy, hardly a minimal consequence (zero cost). Such impact was clearly seen in 2011 when QE1 was implemented. With greater coordination among major central banks, the cost structure is on a slower rise, more evenly applied, with less focus on the USFed. The gross insolvency makes reluctant business expansion, as few companies take advantage of ultra-low rates. The household quagmire continues without end. The USFed with its mindless spew of newly created money has no idea of the consequence, higher costs, lower profits, and reduced income from relentless job cuts. Their promise to continue ZIRP & QE until a positive economic response comes is a death sentence to the system. Imagine administering more whisky to the alcoholic until he can stand, walk, talk, and work. It is mindless to the extreme.

The cost to unlimited money printing is systemic ruin from gradual rising costs, drowning the citizens of the nation with liquidity, but not addressing insolvency. The combination of ZIRP & QE will plow the nation under. Most American economists, also London economists, even Western European economists, have no idea of the lethal monetary policy and its potential to destroy the Western Economy and its entire financial structure. Watch the sovereign bonds and banks all slide into oblivion as no entrenched problems are addressed. The big banks are not permitted to be liquidated. Therefore the rising water (cost) level will remove all oxygen (profit) for breathing (economic) purposes.

It is the Jackass opinion that Bernanke's PhD in Economics should be revoked. In the past four years, he has adequately disproved his doctoral thesis in clear terms. He revised history of the Great Depression, claiming ample liquidity would have shortened that crisis. But the US was on the Gold Standard eight decades ago, a detail overlooked by the quack doctor. The innumerable liquidity facilities used to redeem toxic bonds of various types, together with a skein of bond purchase programs, has neither solved anything nor addressed the core problem. The core problem is a debt-based currency system and unsound money, which has led to debt saturation and systemic insolvency. Cheap money to borrow for a man with more debts than assets, even lowly income, accomplishes nothing. Bernanke is nothing more than a banker harlot whose heretical economics perceptions contribute to the destruction of the nation's entire financial and economics structure. As a nation, we should not continue to disprove his doctoral thesis. Unfortunately, the American public knows very little about money or economics. Bernanke will win the United States a firm seat, if not a throne, in the Third World.

## TUNGSTEN SCANDAL GONE VIRAL

◄$$$ THE CANADIAN MINT WAS A VICTIM OF TUNGSTEN SALTED GOLD BARS. THEY COVERED IT UP BY CALLING IT MISSING INVENTORY OR A FLOOR SCRAP ROUNDING ERROR. THE TRUTH IS COMING OUT. $$$

Fellow colleague and friend Rob Kirby has been an intrepid analyst and reporter on the scene to a concealed victimization. The Royal Canadian Mint in all likelihood suffered a $15 million loss in gold bullion from discovery of salted tungsten bars. They covered up the loss, for fear of negative publicity of massive fraud from the bullion bankers, whose trails would surely lead to the USDept Treasury. The Ground Zero for tungsten salted gold bars will be identified as Fort Knox. Not only were the US gold reserves looted, they were switched as they left the vaults, a double theft. Follow the Canadian story for intrigue and clear paths with solid clues.

Back in 2009, the Royal Canadian Mint (RCM) claimed that it had lost $15 million worth of gold bullion. The blamed the loss on floor droppings during the melting process, an insult to anyone's intelligence and the source of Jackass laughter when the story first broke, during Kirby phone calls. What followed can best be described as a fumbling exercise where several flimsy accounts were put forward to the public in explanation. The RCM is one of the world's most renowned mints, no longer. An official investigation by the Royal Canadian Mounted Police led to a thin veneer of credibility being shattered, where the public was told of lax controls, accounting blunders, and more. The controls were indeed lax, as numerous gold bars contained over 95% tungsten, same weight and same density as gold. Lax Internal Controls at the ISO 9001 accredited Royal Canadian Mint do not wash easily. A better rendition explains the events much more credibly.

Rob Kirby concluded the following, to explain why the Royal Canadian Mint circulated a false baseless story about $15 million worth of gold bullion lost. "In the face of unprecedented demand for Gold Maple coins and with physical supplies of gold being tight in 2009, it makes sense that the RCM would have borrowed gold bullion from one of their customers whom they store bullion for. I have been told by industry insiders that the RCM does not assay gold bars when they take them in for storage. When the RCM tried to melt these bars, they were revealed to be tungsten, which melts at a much higher temperature than gold. This created a very awkward situation for the RCM, having to tell one of their customers that they had stored salted tungsten bricks of gold." See the Silver Doctors article (CLICK HERE). My guess is the fake gold bars came from the United States, whose pathways would reveal narcotics trails from Fort Knox to Panama. Any direct revelation or exposure with details on the perpetrators would have resulted in murders by the US security agencies. It is that simple.

◄$$$ THE TUNGSTEN SALTED GOLD BAR SCANDAL HAS GONE VIRAL. IT TARGETED THE CHINESE AND HONG KONG BANKING CENTERS. THE TRADE WAR HAS ELEVATED TO THE HIGHEST POSSIBLE LEVEL. SUSPICIONS ARE RAMPANT. ACCUSATIONS ARE COMING INTO THE OPEN. THE BANKER SCANDALS ARE MUSHROOMING WITH MANY SIDES COMING TO LIGHT. IT WILL REQUIRE TIME TO PAINT THE FULL PICTURE, WHILE EACH FRONT IS BEING MORE FULLY PAINTED OVER TIME. $$$

The many sided banker scandals are erupting with force and conviction. This is not only smoke but identifiable blazes and captured silhouettes of bankers lighting the fuses. The trails are becoming clear, the full account of data not yet revealed. It might never be revealed. Justice might never be served. As mentioned a few times in past Hat Trick Letter reports, the new sheriff exerting authority and power might prefer to continue to flip the guilty parties to force the highest echelons of corrupt bankers to forfeit control. A race is on to establish justice, to put in place a legitimate stable trade and banking system, to remove key criminal bankers from their posts, BEFORE the world is transformed into a lawless Mad Max landscape with acute shortages, widespread deaths from planted plagues, and produced natural disasters like recently steered on the Northeast United States. The banker scandals are expanding on every front. A survey is useful.

The Gold Fraud has mushroomed in the last few months, as it pertains to tungsten salted bars posing as good delivery gold bars. European and Asian sources allege the tungsten switch has gone sovereign. At the center are Deutsche Bank, China, and the United States embroiled in fake bar suspicions. This scandal goes far beyond empty claims of USGovt gold reserves in accounting, marked under the Deep Storage column. That is merely unmined gold ore still in mountain locations. This scandal goes far beyond manipulation of the Gold price at the COMEX or London. This scandal goes far beyond heists of client accounts at the COMEX standing for Silver in delivery. This scandal goes far beyond the sale of entire annual mining output of precious metals in mere hours, commonly called naked shorting, a highly illegal activity unless done by a USGovt approved large bank. What comes is a bank heist of a different kind. Imagine buying a television set with nothing inside, or a car as nothing but a shell, or cigarettes with only paper inside, or a house with no floors walls or plumbing or wiring. Imagine paying for a costly consultant and a greenhorn without any education or experience shows up on the job. Imagine a president being elected with no certification of identity, either from birth or passport or college experience. Ooops! Such is salted tungsten bars posing as gold.

The salted tungsten gold bar episode has motivated China, the primary victim through its Hong Kong banks, to take action to the next level. China is working hard to unseat the New York and London bankers and their corrupt global monetary system. Not only did Wall Street and the USGovt renege on return of leased Mao Tse Tung gold borrowed between 2000 and 2001, but much fake gold bars were distributed to Hong Kong banks, possibly as part of the lease payback. The HK officials chose not to disclose their losses, working instead on other forms justice. They will displace the New York and London bankers from their hallowed perches. Witness the mysteriously dramatic rise in the level of Chinese gold reserves, vengeance itself. Witness the rise of the Shanghai Metals Exchange, vengeance itself. Notice the admission by several central banks that the Chinese have been buying gold in high volume below the radar. Watch the ongoing scandals involving manipulation of the LIBOR and EURIBOR rates. All these events come atop the multi-$trillion mortgage bond frauds, complete with export from US banks across the world. The US has disseminated significant asset cancer for almost 20 years. The jig is up. Recognition of crimes is coming to light.

Since 2009, scattered reports have come, not just from the Jackass, about major gold investors having trouble forcing Swiss storage facilities to deliver on their gold accounts. The revelation of class action lawsuits against the Swiss bankers will occur soon enough. Some very important events have taken place in the last two months, as Germany has begun a formal demand for repatriation and full accounting of its official gold account from London and New York. Many analysts like James Turk believe the account has been ransacked by the corrupt bankers. Great scurrying has occurred with the Bank of England and BIS in Basel Switzerland serving as backstop to prevent the scandal from coming into full public view.

A quick detail on tungsten. Bars can be made very cheaply. It fools people, even professionals, if gold plated, since tungsten has very nearly the same density as refined gold. Gold sells at around $1700 per ounce, but plentiful Tungsten sells at $10 per pound. The difference is on the order of 2000:1 favoring gold, motive for the switch. With a bit of careful disguise, the placement of tungsten inside a gold bar can fool an X-ray machine under certain circumstances. Numerous instances have been reported of fake gold bars appearing in the Manhattan financial district, at great loss to retailers. A Slog source in Austria alleges that Deutsche Bank fulfilled a gold repatriation in recent years with the help of fake tungsten salted gold bars. He further claims that some of this has surfaced in Asia. Some consistent feedback concerns the Chinese opinion on these fake bars. Their origin is thought by Beijing to be the United States of America.

Some leading journals like Forbes have offered rubbish articles to undermine the tungsten story, others calling it isolated. It is not isolated, but rather widespread and systematic. Late last September, however, Zero Hedge ran a Tyler Durden article confirming that several smaller retail gold bars sold in Manhattan had been found to have tungsten innards. The ZH impression was that it might be part of yet another USFed attempt to impugn the validity of gold, and thus keep investors locked into the stock market, bonds, even property. Fake gold bars of small variety do not compare to 40-oz blocks of grand stored wealth moved by big banks to satisfy big obligations. The difference is tens of $thousands versus hundreds of $billions, since done on a large scale. The consequences are vastly different when an established European bank is alleged to have been caught short on a fulfilment order, and using the tungsten scam to fill the gap.

Deutsche Bank is part of a larger network of corrupt syndicate banks involved in dastardly profound widespread fraud. These are not crude attempts to deceive a retail greenhorn, but rather an well-planned and sophisticated salting of gold bars distributed by a major bank in satisfying international bank obligations that alter the global stability of the entire system. The activity is designed to fool even an expert engaged in approving the purchase for a large sovereign client. The prima facie case for organized crime is clear with mortgage bond fraud, mortgage contract fraud, USTreasury Bond counterfeit, LIBOR price fixing, Gold market price fixing with grand naked shorting, and much more. The big banks are not so much desperate as they are giving license to steal and defraud as part of the deeply rooted fascist system put firmly in place following the World Trade Tower demolitions and $100 billion thefts of bearer bonds, gold bars, and diamonds. Ultimately, the ramifications of banker fraud and theft will be manifested. The discovery of the broad scams is a certainty. See the Hat 4UK article (CLICK HERE). Bring on the RICO laws, enforce them, and confiscate the big bank assets, then sort it out during a USGovt debt default with restructure.

◄$$$ EVIDENCE MOUNTS THAT DEUTSCHE BANK PROVIDED TUNGSTEN BARS TO NATIONS IN REPATRIATION LIKE HONG KONG IN ORDER TO FULFILL THE REDEMPTION. THEY DELIVERED FAKE GOLD BARS, AS PART OF A SYNDICATE PROGRAM TIED TO NEW YORK AND LONDON. THE CORE OF THE PLOT SMELLS LIKE A LANGLEY OPERATION OVERLAPPING THEIR NARCOTICS BUSINESS. THEY ARE NOT SUBJECT TO LAW ENFORCEMENT, NEVER WERE, NEVER WILL BE. THE FOUNDING FATHERS NEVER ANTICIPATED THE CANCER OF A SYNDICATE TO PERMEATE THE ENTIRE UPPER ECHELON OF THE USGOVT. OVERSIGHT OF THE BIG BANKS HAS BEEN POOR, JUST LIKE WITH THE INTELLIGENCE SECURITY AGENCIES. $$$

An Austrian banking source remains anonymous, but has offered explosive information in the continuing story of salted fake gold bars. The intrepid Slog was the source on the story. He claimed that Deutsche Bank fulfilled (his word) a gold repatriation in recent years with the help of tungsten bars. He further informs that the tungsten salted gold bars have turned up in Asia in high volume. My source indicates that Hong Kong is the biggest victim in tungsten fake bar fraud. They are extremely angry, and are working vigorously to displace the Anglo bankers from the global post.

In 2009, Rob Kirby first uncovered detailed information regarding a massive plot to replace 400-oz good delivery gold bars with highly sophisticated tungsten filled fakes. He went further to provide evidence that the bars had been swapped with the gold bars held at Fort Knox. The information was given to both the Jackass and Kirby in January 2010, but the source advised me not to run with the story. His reasons were sound and accepted. Kirby did instead, exposing the tungsten story, leading the interference in bold strokes. The evidence mounts every month. If the Austrian source claims are true and DeutscheBank has satisfied a gold repatriation request with gold plated tungsten bars, the ramifications are profound. First of all, it means the GATA claims of broad corruption in the gold bullion bank sector runs extremely deep, even deeper than the anti-trust action group expected. Secondly, it means the official gold supply is much tighter than the majority of gold investors realize. Thirdly, it means unspeakable crimes have taken place under the USGovt roof of protection.

Caution is warranted, however. The alert observer must be careful not to jump too far in conclusion. The gold market is indeed tight, but the actual Fort Knox bars were essentially stolen, only to be placed in safe locations. The vaults of the Langley outfit and the Basel bunch should submit to discovery of serial numbers in their inventory, maybe even the Roman catacombs and the Carlyle Group also. Whatever organizations are closely linked to the Syndicate narcotics programs should be under suspicion, which means the Langley intelligence agencies. They likely contain Fort Knox bars before the swap of fake tungsten bars took place. This was a Syndicate mission with careful planning, usage of previously shut down refineries, 24x7 operations, planned shipment routes that overlapped with established narcotics routes, and more. The actual gold bars did not vanish. Be sure to know that the official bullion banks will not recover the actual gold bars from the thefts. Instead they stole good delivery gold bars from Allocated Gold Accounts, continuing the chain of grand larceny. Interpol has been on the case for almost three years. They have not shared their findings. They surely are tracking the serial numbers, the refinery stamps, the distribution lines. That is their job, not mine, a dangerous task. My firm belief is that the international police force use powerful leverage to force the cooperation of key bankers, including those from DeutscheBank, which has been named specifically by my source in Germany as having flipped, now working to bring down the corrupt London bankers. This is precisely how the LIBOR bank scandal erupted in my opinion, from other leverage. Next comes leverage to force into the open more Allocated Gold Account ravages leases switches and thefts.

To be sure, the jig is nearly up for the bullion bank cartel. Exposure is happening slowly but surely. See the Silver Doctor article (CLICK HERE). Hey, what does anyone really know? Just a Jackass here thinking outside the box about truly sinister plots and treasonous acts. No proof here, just connecting dots with an open fertile mind ripe with suspicions. The recent events support such viewpoints and suspicions.

## CRUDE OIL & PETRO-DOLLAR DEMISE

◄$$$ SAUDI KING ABDULLAH IS BELIEVED TO BE CLINICALLY DEAD FOLLOWING SURGERY. THE HOUSE OF SAUD IS SLOWLY UNRAVELING, SOON TO FALL. THE PETRO-DOLLAR IS NEXT. WATCH FOR THE SAUDI SUCCESSOR TO BE CHALLENGED IMMEDIATELY INSIDE AND OUTSIDE THE NATIONAL BORDER. THE UNSTABLE SITUATION WILL WORSEN, AND TAKE OUT THE PETRO-DOLLAR. THE DEFACTO STANDARD IS IN SUNSET. $$$

The silence can be regarded as tacit confirmation. Saudi King Abdullah is rumored to be clinically dead. Like wildfire, reports are spreading that the King of Saudi Arabia has suffered widespread organ failure and shutdown, following back surgery on November 18th. Apparently the medical staff in Riyadh have said the organs of the monarch are no longer working, the monarch almost 90 years of age. Speculation has reached a fever pitch ever since Saudi King Abdullah bin Abdul Aziz was reported in the Asharq Alawsat newspaper during the first week of November to be in a state of clinical death for two days, with his organs no longer viable. A medical source said, "The fate of the king will be determined within three to four days." The fate will be set, but the full disclosure would not. No photographs have been released of King Abdullah since he underwent surgery, the Nation reported. The outdated photographs of assassinated Prince Bandar were distributed widely after he was killed by HezBollah. The Saudis employ much more basic propaganda tools.

The Saudi Royal Court has denied the rumors, a gesture of flimsy value. They would deny that sand lies in their kingdom if it supported their ravenous regime. Next in  line is the runt of the litter of brothers, Crown Prince Salman bin Abdul Aziz, who assured cabinet ministers on the health of the King. This prince has 76 years in age, and is considered to be unprepared, ill-suited, and weak as a leader, with scant support. He is half-brother to Abdullah, named Crown Prince in June 2012 following the death of Prince Naif. Witness a degeneration of the House of Saud, where the process culminates in elevation of the least qualified, least strong, and least capable to hold the regime together. In recent Hat Trick Letters, the internal tensions of Saudi Arabia have been  covered. The nation has a gradually rising standard of living, a reduced export surplus, a depleted oil deposit base, and an active population seeking reform, if not a more democratic form of government to displace the royal larcenous regime that holds the majority of national wealth as its own placed in thousands of foreign assets including gigantic bank accounts and massive estates in plum spots from Los Angeles to London to Monaco to the shores of Spain.

Experts anticipate the death of King Abdullah could potentially rock the Kingdom. According to the Saudi Gazette, the powerful monarch has been named as the most influential personality in the entire Muslim world, topping a list of 500. He is popular, perhaps more popular than his older brother Faud, who curried more favor to the British and Americans. The Royal Islamic Strategic Studies Center wrote, "King Abdullah introduced many reforms to society, combated religious fanaticism and corruption, improved educational system, assured women's rights, reformed the judicial system, and provided scholarships to over 130,000 male and female students to study abroad." See the Digital Journal article by Katerina Nikolas (CLICK HERE). Keep in mind that actual verification of his condition is almost impossible.

◄$$$ BAHRAIN IS STRIPPING CITIZENSHIP OF PROFESSIONALS WITHIN THE RESISTANCE AND REFORM MOVEMENT AS THE CRACKDOWN CONTINUES. REFORMS ARE SIDELINED, DEMANDS IGNORED. THE ABSOLUTE RULERS OF THE ARAB WORLD (INCLUDING THE PERSIAN GULF) ARE SOON TO BE SWEPT AWAY, AND WITH THE TURMOIL WILL GO THE PETRO-DOLLAR. THE SAUDI REGIME WITNESSES STRIFE ON ALL ITS BORDERS. $$$

The irony is thick. It started with the Arab Spring, a popular uprising in response to rising food prices. Few associated the growing revolt that swept out the pro-West leadership in Egypt to the USFed monetary policy. Yet the tie is direct, as the USDollar slipped in valuation, resulting in higher food prices in the Arab world, where their societies pay the highest proportion of wages toward food. The always eager US security agencies pushed the instability along, since instability is always seen as good, even if blood and guts spill into the streets. The revolt in Syria is turning into a hot spot extraordinaire, prompting the US to arm the Turks with defensive missile systems. In contrast the Russians are arming Syria with the best in super-sonic missiles.

Focus on another neighbor to Saudi Arabia. The kingdom of Bahrain is unique in many respects, not the least of which is the majority Shiitte population. The Sunni leaders in Bahrain are turning desperate, following a path of King Louis & Queen Marie Antoinette of France. The problems in the tiny nation extend long before the Arab Spring. The repression continues and the struggle against it intensifies. The Western media does not seem to cover the nation's fester anymore, but the situation continues to boil. Violence in the streets has increased markedly. The latest actions have been to strip citizenship of professional citizens, all from one sect Shiite. The majority are born in Bahrain, many of whom working professionals as attorneys, business men, and merchants. They are being expelled, and the people are reacting. Some journalists are being fined for reporting stories. The rulers are boldly diverting from the popular pathways, moving toward deeper fascism. Reforms promised after United Nations report are ignored by the leaders in the government. See The Real News article (CLICK HERE).  

A comment from a reliable subscriber living in the Persian Gulf with a bird's eye view, with clients all across the region. He has contacts in the Saudi security system. He wr ote, "All these Middle East absolute rulers are on borrowed time now. Their arbitrary unaccountable actions are to see a fatal boomerang. Unfortunately the very few considerate and responsible rulers will be swept away with all the others. As seen everywhere, it is the young people in those countries that will either take charge and move things forward or we shall see an Egyptianization a la Mursi for the tiny nation of Bahrain." In recent past email exchanges, he has openly stated that turmoil surrounds Saudi Arabia on all its borders, sure to take down the Saudi regime eventually. When the Jackass responds with a comment in conclusion about the Petro-Dollar falling, the response has steadily been a confirmation or assent.

◄$$$ SOME SIGNALS GIVEN THAT MIGHT INDICATE THE DEMISE OF THE PETRO-DOLLAR STANDARD. THE BRENT OIL PRICE IS FAVORED BY USGOVT OVER WEST TEXAS CRUDE OIL PRICE. THE GREAT OIL ARBITRAGE GAME PLAYED BY WALL STREET AND LONDON IS COMING TO A CLOSE. MORE CHINA-RUSSIA ENERGY COOPERATION IS HAPPENING. NUMEROUS FLANKS OF THE PETRO-DOLLAR ARE BEING ATTACKED. ITS OBVIOUS SUNSET COULD SOON BE WELL UNDERSTOOD. $$$

For sure China is encircling the Petro-Dollar wagon to stick a spear in it with the North Sea oil deal. According to Reuters, "Canadian authorities have approved the acquisition of Nexen Inc by China's CNOOC Ltd, a source familiar with the matter said on Friday." It appears the Canadian Govt decided against causing Chinese fury over its merger & acquisition overtures. The attempt at protectionist posturing in political kneejerk reaction was overcome in the end. NEXEN controls a large portion of North Sea oil which serves a key role in determining the Brent oil price. Therefore, the alert analyst can conclude that China will play a bigger role in determining the oil price. China will also be able to ensure it is fairly set, and even to reduce the orchestrated volatility by the corrupt Wall Street and London bankers. See the Zero Hedge article (CLICK HERE) which contains nothing more than the above quote.

In an historic break that eludes almost all US news networks, the USGovt switched from tracking the West Texas Intermediate oil price. It is widely understood to be manipulated by the big oil firms, Goldman Sachs, and Morgan Stanley. Instead, the USGovt will track the Brent oil price. This is a huge blow to the entrenched Boyz. The casual observer might not make additional connections, but they are worth citing. The change could be a signal of some key events, like the end of the Petro-Dollar standard whereby the OPEC nations led by the Saudis sell crude oil for USDollars in payment. It could also be a signal of the imminent death of King Abdullah and the fall of the House of Saud. It could also be a signal of the imminent passage of Papa Bush to a nether chamber with judgment. He has served as the hidden lead figure for Nazi America, and owns a $trillion portfolio from over four decades of narcotics profits protected by the USGovt security agencies, including the Drug Enforcement Agency and the Coast Guard.

For the first time, the Brent oil price is favored over the West Texas oil price by the USGovt, according to dictates by the US Dept Energy. As rising domestic US production fills the national stockpiles, the American benchmark oil grade will defer to the global version held as standard. Some strange effects are noted. The USEconomy enjoys a lower energy cost, reinforced by much lower natural gas prices (the world natgas price is four times higher). The higher domestic supply would dictate a lower price as the USEconomy deteriorates, and lower demand is seen. Nevertheless, the Energy Information Admin in WashingtonDC dispensed with West Texas Intermediate for its price forecasts in its Annual Energy Outlook 2013, finally addressing a growing discrepancy between WTI and global crude prices. The gap has been a regular topic in the Hat Trick Letter, the argument stated of its being a corrupt tool. The Brent price represents the Northwest Europe market. It is used as the benchmark for all West African and Mediterranean markets, even for some Southeast Asia market. It is more directly linked to a larger global market.

The WTI oil price has fallen 11% this year as the US produces oil at the fastest rate in almost two decades amid a boom in horizontal drilling and hydraulic fracturing, called fracking. The buzz has that the US on on course to become self-sufficient in energy by the next couple decades. On the other side, the Brent benchmark grade for prices from Saudi Arabia to Russia has changed only little. The Brent oil price is supported by demand in Asia, actually lifted by concern over supply disruptions from the North Sea to Libya and international sanctions on Iranian exports. Brent responds to the Suez and Hormuz pressure points. Gordon Kwan of Mirae Assets Securities in Hong Kong said, "This makes perfect sense as Brent is a better reflection of global oil demand and supply than WTI. The WTI has become a misleading price indicator for global economic growth and will become increasingly less relevant versus Brent oil."

Prices have diverged in the last couple years, and diverged to the point of embarrassment. The excuse of bringing plentiful Datoka Bakken supply to market seems absurd, when Wall Street has controlled the price with hammers fashioned of paper and corruption. The WTI traded on the New York Mercantile Exchange has been between $20 and $23 cheaper for several months, compared to Brent on the London-based ICE Futures Europe Exchange. Note that WTI had been an average $1.01 more expensive in the 10 years through 2010, due to higher quality and lower contaminant content. Some reflection in commodity indexes will come. The Brent allocation in the Standard & Poors GSCI Commodity Index of 24 raw materials will be increased to 22.34% from 18.35% in 2013, while the WTI weight will be cut to 24.71% from 30.96%, so claims Michael McGlone, a vice president at S&P Dow Jones Indices. Goldman Sachs expects the difference in price, called the spread, will fall to $6 a barrel next year, stated in a recent research report. Permit the Jackass to doubt that will happen unless a pipeline is constructed to New Jersey or through the Great Lakes.

The CME Group criticized the EIA decision. The group operates the NYMEX where the WTexas crude oil contract is traded. They admit the WTI oil price has been kept down by a lack of access to waterborne markets, a situation that will change with pipeline reversals and additions and growing rail capacity. An interesting spin, with indirect reference to the Keystone Pipeline, which President Obama dutifully halted in a genuflection to his Big Oil and Wall Street masters. The shutdown of the pipeline has kept the plentiful Dakota oil and even the Athabasca oil in Canada from reaching the domestic market. It goes to China via the Pacific coastal ports. The Wall Street firms play the differential in oil price as arbitrage for easy profit. The decision actually favored the Chinese by pushing the Canadian supply to the Pacific coast, where it loads onto Chinese cargo vessels. Some analysts believe the US is deliberately holding its oil supply in gigantic volumes for the next chapter, in order to alleviate crippling economic conditions or to herald the arrival of a more deeper American socialist system. See the Bloomberg article (CLICK HERE). Also see the Gold Switzerland article by Chris Cook as part of the Matterhorn Interview (CLICK HERE) with YouTube video (CLICK HERE). Cook discussed the energy agency reports, the dominant factors in the oil market, his version of a commodity-based currency, and the consequence of a rising oil price for gold.

Meanwhile, out of China has come more reiterations on the high priority of Russian ties. Recall that Russia and China signed a summer deal whereby Russian oil could be sold anywhere in the world, paid for in Chinese Yuan. The Chinese would serve as intermediary on all transactions. The maneuver essentially stuck a sword into the flank of the Petro-Dollar defacto standard that has existed for 40 years, yet received nil press network attention. To be sure, Russia has never been a full participant in the OPEC procedures. But the Beijing maneuever is a cunning step. See the Rediff article (CLICK HERE).

◄$$$ CHINA HAS BEGUN TO ASSERT ITSELF IN THE MIDDLE EAST ON THE CRUDE OIL FRONT. THE UNITED STATES APPEARS TO HAVE DROPPED THE OILY BALL IN IRAQ. THE ADVANTAGE ON OIL SUPPLY QUICKLY HAS VANISHED. BAGHDAD HAS TURNED TO CHINA, WHOSE CONTRACTS WERE ABROGATED IN 2003, ONE OF MANY HIDDEN MOTIVES FOR THE WAR. WITH DEFT MOVES ON IRAQI DEBT FORGIVENESS, CHINA HAS MOVED IN WITH BOTH FEET. THE UNITED STATES HAS LEFT BEHIND A SCARRED LANDSCAPE AFTER SUPPOSED NATION BUILDING THAT ONLY NAZIS WOULD APPRECIATE. AS CHINA ENTERS FURTHER INTO MIDEAST OIL CONTRACTS, WATCH SAUDI ARABIA TILT FAVOR TO CHINA. THE PROTECTION OF THE SAUDI REGIME GOES SIDE BY SIDE WITH THE PETRO-DOLLAR. $$$

As the sun sets on the Petro-Dollar, the case of Iraq comes to the fore. The United States might not have wanted the lucrative crude oil contracts after all. The Jackass position has been steadfast for several years that key motives for the war have been to grab crude oil supply, to skim on vast military contracts for Halliburton and Blackrock, and to establish a clearing house for processing narcotics transactions from the Afghan supply chain. The clearing is done at the Iraqi Export Bank managed by JPMorgan. The crude oil motive might have been less than perceived, and contract fraud and money laundering probably are bigger motives. In any event, the Chinese are moving in to capture Iraqi oil. China is grabbing the Mideast oil as US power dips. The US appears unspeakably incompetent as well as corrupt.

As Baghdad leaders grapple with defections by international majors like Exxon Mobil and Chevron of the United States and Total of France, China has stepped in aggressively. They see the opportunity. Consider it part of the Chinese strategy to secure oil and natural gas resources in the Middle East and Africa as US influences fades. Next is the prize. China's clout in Iraq will rise across the Middle East, in a grand counter-balance of geopolitical power, to be observed next in Saudi Arabia, where US influence is fast diminishing. The US mavens might regard domestic production to compensate as it soars from vast shale oil deposits in Bakken. Watch for strategic decisions to withdraw support for the Saudis, which could prompt a serious weakening if not fall of the House of Saud and its 60 year reign. The balance of power can be measured by the shipment of crude oil. Saudi Arabia already ships more oil eastward to Asia than it does to the West, a little known fact.

Iraq is emerging as an oil producer again, and the Americans dropped the ball they have sat on since 2003. The $2 to $3 trillion war was for naught, unless the criminal motives are measured. The squelching of terrorism argument is for the morons in the crowd. Iraq could become the world's next oil superpower if trends continue, with China acting as Iraq's main beneficiary of its rich resources. Iraqi production is rising significantly, driven by international investment. Its current output is 2.9 million barrels per day, expected to double by 2020. The IEA forecasts by the end of the decade, production capacity will likely be in the 6 to 8 million bpd range. The Baghdad-Beijing axis is forming, a term used by IEA chief economist Fatih Birol. The estimated reserves in Iraq total 143.1 billion barrels of oil and 112 trillion cubic feet of natural gas. Beijing has noticed, and played a card with skill. While the Americans were nation building, using helicopters in sport shooting of civilians in hostile zones, fending off IED bombs across the country where local officials cooperate, and defending the massive Green Zone of the $1 billion Embassy from mortar fire, China bought itself significant goodwill in 2010 by forgiving about 80% of the Iraqi $8.5 billion debt to China.

By year 2010, China had committed to five major oil investments in Iraq. The China National Petroleum Corp, parent of PetroChina, is the nation's largest oil producer. It is pursuing a stake in the giant 17 billion barrel Rumaila oilfield in southern Iraq. Rumaila is the country's largest. PetroChina, a CNPC subsidiary, has a 37.5% stake in another major southern deposit. The Halfaya oilfield has reserves of 4.95 billion barrels. China Petroleum & Engineering Corp (aka Sinopec) built three crude oil processors in Halfaya under a $174 million contract before the field began commercial production in July. The facility is set to produce 300,000 barrels per day by 2013. The Chinese intend to acquire the Total stake in Halfaya. The Baghdad leaders are angry over a controversial deal signed by Total with the Kurds to the north, and might force a divestiture. Two factors stick out. The Western oil firms are pursuing deals with the Kurds, long at odds with the capital. The same firms are unhappy with results in the south near Basra, where instability is greatest and results are poor. Maybe the US left Iraq after losing the rich oil channel to China. The US consistently focuses on war and banks, while China on trade and development. This is the fascist contrast.

The Chinese are flush with cash unlike their competitors, the key to making big strides in capital outlays. Michael Cole, a former officer with Canada's Security Intelligence Service, commented. "Even more than Russia, a traditional player in Iraq during the Soviet era, China has the capital that Baghdad is desperately seeking to build its oil and gas infrastructure, while Iraq has crude potentials that are alluring to a China that seeks to diversify its energy sources. Given the high stakes for the region, Beijing's engagement of Iraq over the next decade will deserve close scrutiny." The risks remain, as Iraq remains volatile and unstable. The potential for continued conflict and violence between majority Shiites and minority Sunnis in Iraq will never go away, in particular to the South. Here is where protection of investment directs attention to Saudi Arabia. Not only is the vast Iraqi energy infrastructure vulnerable to attack, but shipping lanes are vulnerable. As Chinese investments in the Middle East expand, Beijing must bring greater focus on protecting its energy shipments through the Persian Gulf and the Indian Ocean en route to East Asia. A growing Chinese naval activity has been seen in the Indian Ocean. The other booming Asian economy in India has sights on MidEast oil supplies also. Beijing will have to compete with India, Asia's other booming economy also dependent on energy imports. See the UPI article (CLICK HERE).

The global mantle of leadership is available for the next strong contender nation. Germany prefers secretive power in consultancy. China lusts for respect on the global stage. When China asserts itself further in the Middle East, in particular in the Persian Gulf, only then will the Petro-Dollar suffer its horrible death, and with it the USDollar reign. The signal is oil deals, shipping traffic, and protection for the Persian Gulf. All signals are flashing along a pathway to guide Chinese steps in dominance.

## EURASIA TRADE ZONE ADVENT

◄$$$ THE GIANT ASIAN TRADE TRADE ZONE IS FORMING. IT INCLUDES AUSTRALIA AND NEW ZEALAND, BUT EXCLUDES THE UNITED STATES. WITNESS A MAJOR PARADIGM SHIFT ELEMENT. THE US-FAVORED TRANS-PACIFIC PARTNERSHIP NEVER LEFT THE PORT, ABANDONED. IT ACTUALLY TRIED TO EXCLUDE CHINA IN A TACTIC OF SHEER STUPIDITY. THE UNITED STATES IS SEEN AS A CAPITAL VAMPIRE, NOT A CAPITAL BREEDING GROUND. INNOVATION AND BUSINESS INVESTMENT ARE ON THE DECLINE IN THE USECONOMY. THE ISOLATION OF THE UNITED STATES HAS BEEN FULLY EXPECTED. NEXT COMES THE ECONOMIC IMPACT, THEN THIRD WORLD. $$$

Spengler posted a superb article on Asia Times, a leading journal on matters pertaining primarily to China, the emerging giant. The following is an edited version of the article, taken in large blocks verbatim. He touched on many extremely important topics, and provided excellent revealing graphs. A Paradigm Shift is taking place, and the ASEAN-China summit gave proof positive in a seminal event of the vast changes in progress. The United States just suffered its worst humiliation ever as a nation on the Eastern global stage. It was exceeded only by the humiliation for a US president personally. The story went uncovered by the lapdog inept US press. The late November Asian summit meeting held in Phnom Penh included 15 Asian nations, which represent half the world's population. They decided to form a Regional Comprehensive Economic Partnership that excludes the United States. Regard it as punishment for hegemony, or for requisite capital drainage, or for central bank abuse, or for bond fraud export, or for military aggression, or for banker criminality, or simply for being totally full to the brim of American corruption and arrogance.

President Obama attended the summit to sell a US-based Trans-Pacific Partnership, designed to exclude China. It is regarded as a dead meal at an empty table. It occupied many US-based think tanks, in purely oblivious focus. Spengler concluded, "As it happened, this grand game-changing vision mattered only to the sad, strange people who concoct policy in the bowels of the Obama Administration. America's relative importance is fading." The nations uniformly rejected the US-led plan. The proposed partnership actually was designed to exclude China, in an incredible blunder of judgment and insult to Asian intelligence, in total absence of geopolitical power reality. Instead, the Association of Southeast Asian Nations (ASEAN) plus China, India, Japan, South Korea, Australia, and New Zealand, will form a trade consortium and leave out the United States. As three billion Asians awaken and become prosperous, interest fades in the prospective contribution of 300 million Americans. They are widely regarded as less willing to take risks on new technologies. The perceived American objectives in recent years have been assured capital provision, and to further war efforts, with its destructive trickle down and narcotics emphasis in banking. One might conclude that China is seen as much more proficient at building from trade.

The Asian nations increasing see the United States as a nation in decline, possibly soon to suffer a systemic breakdown from a corrosive combination of insolvency, absent industry, corruption in banking, and devotion to war for its booty. Only four years after the 2008 economic crisis, which served as a death knell in the Jackass opinion for the nation, the great American economic strength exists mainly in memory. The capacity toward innovation, marked by patent registration, has shifted to Asia in clear terms. With insolvency and new ideas centered upon new taxes and grander socialist agenda against a backdrop of sacred endless war, the nation is in its twilight, an obvious perception except for myopic loyalists. The Asian nations see it, and choose China for future direction and leadership.

Put these matters in context. The exports from Asian countries have risen over 20% from their peak before the 2008 economic crisis, while Europe's exports have fallen by over 20%. American exports have risen marginally (by about 4%) from their pre-2008 peak. The rise in European exports had been explained from 2008 to 2011 by a rise in exports to Chinese destinations, after the trade war became more obvious and corrosive.  The EU export dip addresses the Chinese broad slowdown. The crippling events of the US-centered banking collapse in late 2008 have resulted in a potentially fatal blow to the US and Western Europe, which follow the US destructive policies.

Asia is becoming China-centric. Its production often uses Japanese technology. Costs in shipping are less. Increasingly, trade is done in Chinese Yuan currency, further reducing costs. The Chinese exports to Asia have risen strongly by 50% since their pre-crisis peak in 2008, while Chinese exports to the United States have risen by only 15%. The USEconomy terminal recession, guaranteed by the Zero Interest Rate Policy plus Quantitative Easing, will continue to force US imports lower with each passing month. The US market is becoming less important a factor to China. The total Chinese exports to Asia come to US$90 billion, three times its total exports to the United States. The US-based economists appear to enjoy their perennial wrong forecasts about a hard landing for the Chinese Economy. It suits their purposes and arrogance. The evident truth is that China will have no hard landing, nor any great inconvenience at all. Both domestic consumption and exports to Asia are running nearly 20% ahead of last year's levels. This powerful duo effect compensates for weakness in certain export markets and the construction sector. Exports from the moribund USEconomy are stagnant, although Obama often cites this as a signal of recovery.

In 2002, China imported five times as much from Asia than from the United States. Currently it imports 10 times as much from Asia than from the US. The United States is less a player, at a time when the trade war heats up mightily. Furthermore, in lockstep with the trade patterns, Asian currencies have begun to trade more closely with the Chinese Yuan than with the USDollar. This point was made in last month's Hat Trick Letter report. The pressure is on the US as a nation to produce and to innovate. Its productive capacity toward the military complex is certain, but the destructive effects yet to be understood. The innovation has become the province of Asia. In the 1980 decade, the US boasted as many patents as the rest of the world combined. No longer, as the US is a laggard, preoccupied by Apple I-Pods and 3G cellphones and FaceBook and other distractions. Apart from commercial aircraft, power generating equipment (turbines & nuclear), and agricultural output, the United States has few areas of real industrial pre-eminence for the private sector usage. The US lags badly in the industrial space, after forfeiting a dominant slice of factories to China in the last decade, in perhaps the most suicidal economic policy ever witnessed in the 250 years of the nation. A case in point is the nuclear power plant industry no longer dominated by the United States.

The USGovt leadership watches idly as the industrial base erodes. With the sale of the Westinghouse nuclear power business to Toshiba, and the Toshiba joint ventures with China to build power plants locally, the advantage has evaporated. The problem is that Americans have stopped investing in the sort of high-technology that supports high value added industries. This is precisely what Asian economies require and pursue. The US-based capital goods orders are 38% below the 1999 peak, after taking inflation into account. The decline is over 60% with a CPI inflation measure based in reality and not in witch doctor laboratories. The US-based venture capital allocations for high-tech manufacturing have dried up. The allocations for networking & equipment are an astonishing 90% below their 2003 levels, while computers & peripherals hold steady, down somewhat. Consider the networking to be the highway infrastructure, and the computers to be the cars. The infrastructure is degrading in the US, consistent with my claim of a hard turn to the Third World. Like the Jackass forecast of a USGovt debt default, the Third World forecast will also be mocked until its reality, causing amusement for the criticism heard for past mega-forecasts like the wreckage of the US housing market and the insolvency of the US banking system. Hard to blame that on Islamic terrorists, or infiltration through US airports, or inadequate amber alerts on our highways, or any number of moronic policies that distract from diagnosis of the real problems. Bank corruption and devotion to war are killing the United States.

Without innovation and investment, the Washington policy circuit is rendered useless. Adjustment in exchange rates does not address a trade war stance, ignorance of innovation, and devotion to war. The US-based problems are of insolvency across the entire spectrum, which gravely affects education budgets. One must return to the grand insult of Obama and the USGovt delegation at the Asian Trade Summit. When he arrived in Asia bearing a Trans-Pacific Partnership designed to keep China out, it is unclear that he offered anything tangible. The United States is borrowing $600 billion a year from the rest of the world so as to finance a $1.2 trillion government debt, most prominently from Japan. What America gives Asia in return is seen as little. Trade has resulted in accumulation of questionable USTBonds, soon to go toxic. The Tokyo bond merchants have their own agenda at work, to prevent the Yen currency from rising, as Asia hunkers into mature established Japanese Govt debt securities. Worse, China has been a net seller of Treasury securities during the past year.

In summary the United States is a taker of capital rather than a provider of capital, the nation transformed from beacon of liberty and incubator of capitalism to a vampire of capital and corrupt fascist warmonger. Asia sees the tragic transformation. To be sure, the US remains a major import market. But even that item is rapidly diminishing in relative importance. The intra-Asian trade continues to expand far more rapidly than trade with the United States. The spectacular wondrous marquee advantage of American strength as an innovator and incubator of entrepreneurs has diminished drastically since the 2008 crisis. The movement toward socialism and welfare society will progress with the Obama II Admin, which imposed a steep tax on small businesses in the form of its healthcare program. As Spengler concluded, "Washington might want to pivot towards Asia. At Phnom Penh, though, Asian leaders in effect invited Obama to pivot the full 360 degrees and go home." He meant 180 degrees. See the oustanding Asia Times article entitled "Post-US world born in Phnom Penh" by Spengler (CLICK HERE). As Asia gathers its strength, it turns to Europe for partnerships, alliances, and counsel in structural design. The principal engineer of the new Eurasia Trade Zone is Germany, and the principal player is China. The stockpile will be Russia. The supporting cast will be the Persian Gulf.

◄$$$ PUTIN HAS BEGUN TO PUSH THE EURASIAN CONCEPT. HE VISITS BRUSSELS AS EURASIAN UNION LEADER LATER IN DECEMBER. MUCH HAS TO BE HAMMERED OUT BEFORE ANY IMPORTANT ACCORD CAN BE REACHED. BUT IN TIME IT MUST BE DONE, AS THE CENTER OF GLOBAL COMMERCE AND POWER HAS SHIFTED AWAY FROM THE UNITED STATES. CAUGHT IN THE MIDDLE IS UKRAINE. PUTIN MUST COMPROMISE. $$$

Russian President Vladimir Putin is expected to attend the EU-Russia summit in Brussels later on December 21st. He will likely use the occasion to launch his pet project, the Eurasian Union. It is designed after the European Union, but without the built-in destructive platform of a common currency. Ironically, later a common gold-backed currency could be a sensation and USDollar death blow. The Eurasian project will change the global balance, and work to dismiss the American leadership. In the Jackass opinion, it will isolate the United States to the point of enormous risk. The summit is the second to take place this year, after a first gathering took place in St Petersburg in June, where Putin listed conditions for signing a new basic treaty between Russia and the Europe. The Russian leader has declared a condition for further accord. The European Union must formalize relations with the so-called Common Economic Space involving Russia, Belarus, and Kazakhstan. The three countries have forged a customs union that could serve as a basis or obstacle. Putin seeks to expand the union to include other former Soviet countries, including Ukraine, which is recovering from a massive energy contract scam.

The EU-Russian relation basis is currently governed by a 1997 Partnership & Cooperation Agreement, which is ovedue for replacement after 10 years. The negotiations on a new basic treaty have stalled, due to numerous disruptive agents such as the sovereign bond crisis in Europe and focus by Russia on important Chinese accords. To date, a stall is apparent. The European Commission President Jose Manuel Barroso and Council President Herman Van Rompuy have explained that the Union did not have a mandate for negotiations with the Common Economic Space devised by Putin. In recent months, Russia became a full member of the World Trade Organization. The rise of Kazakhstan and Belarus to the world trade body will take time, delaying any plans for a basic treaty between Brussels and Moscow.

The Putin plan for Eurasia is stubbornly set, his position not to yield. His desired format is firm, if not intransigent. Putin must realize that Europe is not under his dominant thumb like the entirety of Russia. Conversely the EU cannot have relations with Russia only, which is desired. Consider it vestiges of the Former Soviet Union, where the Russians have native loyalty to the old union. The Russian and EU officials have revealed some less than minor differences at a meeting held on December 3rd by the Centre for European Policy Studies (CEPS), a Brussels think tank. Offered research papers have been floated, the divisions made clear. They are obstacles which will be overcome, since Eurasia will certainly and definitively formalize the next chapter as the US exits the center. This is mere geopolitical commerce acting from the strong forces of gravity. Some criticism seems shallow, such as Russia being too large to serve as a balanced structure. The EU has shown in stark terms that Germany is too strong industrially and financially to enable a balance Europe trade zone. The rest of Europe consists of southern cripples enjoying the good socialist life, allowing Germany to pay for their lifestyle.

The lack of a reliable court system in the old Soviet Bloc also hampers progress. The proponent from the Russian camp claimed that the customs union was still being modeled after the EU system, but with some advantages like the lack of Parliamentary scrutiny. The EU leadership would prefer another customs union in its regional shadows if it contributed to the liberalization of economic relations. Tariff protection in Kazakhstan has been cited. Other criticism has come in the identification of Russian import barriers that are inconsistent with WTO rules, in addition to a bias against imported vehicles. The exclusion of Ukraine to date has caused some confusion. Unlike Russia, the Ukraine actually has sought EU integration. The nation is caught in the middle. In the final analysis, a free trade area from Lisbon to Vladivostok, as described by Putin, will require much more cooking, more hashing, some constructive debate, and some relinquished ground by Putin. But it will happen from natural forces, desired global shift, and common need. See the EurActiv article (CLICK HERE).

## THANKS

Thanks to the following for charts StockCharts, Financial Times, UK Independent, Wall Street Journal, Zero Hedge, Business Insider, Calculated Risk, Shadow Govt Statistics, Market Watch.